Oil Unemployment Is Not a Big of a Deal… Yet

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By Jacob Maslow

TechniciansOne of the biggest fears of economists regarding the current oil crash is the impact on employment rates. There are key US states that are highly dependent on the energy sector for employment. Moreover, there are lots of jobs riding on oil jobs, meaning for each oil job generated, there is a multiplier effect. This oil job tends to create other related service industry jobs. That is how the economy works. Different economic sectors are interlinked, and this linkage produces a lot of jobs and a lot of economic activity.

Well, now that the price of oil has fallen roughly around 50%, the big fear was that there would be a huge amount of job losses in North Dakota, Texas, and other states. That is not happening. While unemployment did go up in North Dakota, by and large, the total economic effect has been minimal. This is great news. However, it is too soon to tell what the real economic impact would be over the midterm. Keep in mind that some economists are predicting that the price of oil will continue to crash until it reaches around $30 per barrel. By that time, it would probably be a good stage to start looking at the broader economic implications.

The upside to the erosion of the price of oil is that it can actually create new employment because the hope is when people save money at the pump, a lot of this money would go into spending. Whenever consumers spend, jobs are created. We will definitely see in the coming quarters.

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