Published August 14 2011
Poverty in the Oil Patch: Not everyone is sharing in the wealth from high-paying energy jobs in western North Dakota
The oil and gas industry has contributed to the state’s nationally known prosperity and created high-paying jobs in western North Dakota.
But those who don’t make oilfield wages face the boom’s negative side effects, including the increasing cost of rent, services and goods.
“I think the common misconception is that since we are in what most people call ‘oil country,’ that everybody is wealthy,” said Holly Flatau of the Great Plains Food Bank in Fargo.
“What it’s actually caused is a greater gap in those that are wealthy and those who are not. It’s harder for people that aren’t wealthy to make it on their own.”
McKenzie County ranks in the top five average annual wages in the state, with an average salary of $51,493 in 2010, Job Service North Dakota figures show. Neighboring Dunn County ranks seventh at $44,886.
But McKenzie County’s poverty rate is 12.8 percent, compared to an 11.7 percent state average, according to the U.S. Census. Dunn County’s rate is 11.2 percent.
To help ease the burden, the food bank’s mobile food pantry makes the 750-mile round-trip from Fargo to western North Dakota every three months, stopping in Grassy Butte, Watford City and Killdeer. The most recent stop occurred late last month.
Of the 18 communities the mobile food pantry serves, Watford City has one of the biggest turnouts, said Melissa Sobolik of the Great Plains Food Bank. About 200 people typically seek food assistance in the city of more than 1,700.
“The need has stayed really high,” Sobolik said. “There’s this stereotype that everybody is getting an oil check. That is absolutely not the case.”
Why the poverty?
Local officials say several factors account for the poverty rates in the oil-producing counties.
Even though there’s a lot of money in the area, it’s not shared equally among the residents, said Rep. David Drovdal, R-Arnegard. A lot of the mineral acres also aren’t locally owned, he said.
The demographics of the area also contribute to the poverty numbers.
Watford City Mayor Brent Sanford said his city has a number of fixed-income retirees. Both Dunn and McKenzie counties also include portions of the Fort Berthold Reservation.
In addition, job seekers moving to the area are trying to get established and find work, said McKenzie County Extension Agent Marcia Hellandsaas.
Even those who do have oil jobs with good wages may struggle if they’re paying high rent in North Dakota and sending the remaining money to their families still living in other states, Sanford said.
The biggest challenge is housing: the lack of it and the cost, said McKenzie County Social Services Director Amy Fast. As workers flood into the rural areas with housing shortages, stories abound of landlords spiking prices on what is available.
“It’s very common to be paying – I’m going to use the word outrageous – rent amounts,” Fast said. “If you have a job not related to the oilfield – it could be very stable and obviously could be gainfully employed – but how do you afford the housing and what housing?”
A house that cost $200 to $300 per month to rent before the boom now costs up to $2,500, Drovdal said. Sanford said the rent for one of the mechanics at his car dealership doubled from $400 to $800 per month.
“It doesn’t seem to be reasonable to me,” Sanford said. “The excuses you hear from the folks that are doing it are, ‘If it’s not me, the next guy’s going to do it.’ ”
Killdeer City Commission President Dan Dolechek said he’s seen people living in cars and laundry hanging on trees to dry. Not everyone is willing or able to work in an oil-related job, and everyday expenses have skyrocketed, he said.
“You have people that are really taking advantage of a lot of the people,” he said. “I don’t know how a lot of the people can make it.”
Food pantry help
Two years ago, Fargo’s Great Plains Food Bank stepped in to help via its mobile food pantry.
A 2008 study looking at hunger needs in the state reviewed how far people had to drive to a food pantry and how often pantries were open. The food bank determined 26 counties were underserved, with the greatest need in western North Dakota, Sobolik said.
So the food bank created a mobile food pantry: trucks filled with boxes of food that cross the state and serve people directly in areas that either don’t have a food pantry or need additional help.
The 18 cities now served are visited quarterly. The food bank provides one 40-pound box of food for every two people in a family.
“We figure that the food that’s in the box would last two people about a week,” Sobolik said. “It doesn’t give them as much as they’re going to need, but we’re hoping just to be a supplement.”
Watford City residents say the help is needed. Half an hour before the mobile food pantry was scheduled to arrive one day in late July, cars were already lined up and waiting.
Among them was Greg McManus, who came to Watford City four years ago with a high-paying job as a computer programmer. After the company relocated, he tried finding a job in the Oil Patch but wasn’t hired.
He now supports his family of five on a $9 an hour wage working at a local nursing home.
“So we need stuff like this,” he said of the mobile food pantry.
Tina Kostad of Watford City said she and her husband both work, but soaring prices make it difficult for people to make ends meet.
“Even the people who are making a lot of money, once you start paying for everything, that money is gone fast,” she said. “Anybody with a family, it doesn’t matter where you work, it’s going to be a struggle.”
Not everyone can leave work to make it to the mobile food pantry, so others pick up food for them, Kostad said.
“This food pantry really helps out the community by providing food that a lot of families are not able to provide for themselves,” she said. “Everything has gotten so high that just going to the grocery store is hard for a lot of people right now. And this food pantry makes it so their families can eat.”
In addition to the mobile food pantry, NDSU Extension and McKenzie County Social Services operate a local food pantry. The pantry is open once a month and accepts calls in between. Hellandsaas estimates they help 20 to 30 families per month.
“There’s definitely a lot of poverty out there,” she said. “We definitely are not even seeing even half of them, not even a quarter of them.”
They are considering extending the food pantry’s hours this winter and continue to provide help with financial planning and nutrition, she said.
Looking for answers
Certainly the oil boom has helped western North Dakota reduce poverty rates from 10 years ago through the additional jobs and higher wages.
But officials run into hurdles trying to find answers for the challenges the boom brings.
The North Dakota Apartment Association does not get involved with rent prices, said Executive Director Mona Hurt.
Establishing state or local rent control standards would be difficult because it raises questions about how to set them and about government interference with private enterprise, said Sen. Rich Wardner, R-Dickinson, a former chamber of commerce director.
One of the solutions to the housing crunch is getting companies to build rental properties with reasonable prices, he said.
Sanford, the Watford City mayor, agrees. Officials need to look into what incentives would get some of the big apartment builders in Fargo or Bismarck to construct affordable housing in the Oil Patch, he said.
“If you put the same rents out here as you did in Fargo, (the housing) would be gobbled up in days,” he said.
The imbalance of supply and demand in the housing market needs to be dealt with to help bring back moderation, said Mike Anderson, executive director of the North Dakota Housing Finance Agency.
“The problem is, how do you catch up with demand with it so strong out here?” he said.
Concern over previous boom/bust cycles delayed development and also contributed to the higher prices, Anderson said.
“There are still those who are saying that, you know, if a bust is eminent, then I’m only going to invest out there if I can get my return in a shorter period of time,” Anderson said. “In order to do that, they’ve got to charge excessive rents.”
The state housing agency is trying to encourage as much responsible development as it can and continues to work with cities to help with their affordable housing issues, he said.
One potential solution is employer-assisted housing, Anderson said. If an employer has trouble keeping or attracting workers, the employer could become a landlord or provide housing subsidies to employees.
Drovdal said local officials are trying to encourage the construction of low-income houses, but it’s hard to find contractors.
“(The issue) isn’t being ignored,” he said. “It just takes a little time to find answers to these serious problems.”
The state Commerce Department offers two programs to help provide affordable housing across the state, said Paul Govig, director of the Division of Community Services.
However, there’s a lot more demand than dollars, and private developers typically want to charge the market rate, he said.
Legislators will study the state of the energy sector before the 2013 session, said Wardner, chairman of the Energy Development and Transmission Committee. This includes continuing to review infrastructure and housing needs and what legislators can do to help, he said.
Dolechek of Killdeer said it’s tough to see a family living in a car or camper or being evicted because they can’t afford the newly-spiked rent.
“It’s good for some people with the oil boom around here, but there’s definitely the downside also,” he said. “I don’t know what the solution is. I wish I would know. I would be a pretty popular guy.”
Finneman is a multimedia reporter for Forum Communications Co.