Sustained Outrage

How many jobs would a ‘cracker’ plant create?

Gov. Earl Ray Tomblin waves to the crowd Wednesday, Jan. 11, 2012 prior to delivering his state of the state address at the Capitol in Charleston, W.Va. (AP Photo/Jeff Gentner)

Gov. Earl Ray Tomblin focused attention during last night’s State of the State address on his administration’s efforts to land a “cracker” plant that would create spin-off jobs based on the boom in natural gas drilling in the Marcellus Shale fields across West Virginia. The governor promised:

I will do everything in my power to make sure that West Virginia is positioned to take full advantage of this opportunity. I will not limit our efforts to just one project or even two. We will compete for every project — every dollar of investment and every new job that relies on the natural resources with which we have been so blessed.

Among other things, Gov. Tomblin said he plans to introduce legislation “to further refine our incentives in a fashion I believe will strengthen our competitiveness,” a proposal that the West Virginia Center for Budget and Policy have already explained is based on pretty questionable math.

But the governor also made this statement in his speech:

The American Chemistry Council estimates that we could create an additional 12,000 manufacturing jobs in West Virginia with the construction of an ethane cracker.

Now, when you think of manufacturing jobs, you think of pretty darned good jobs, right? Overall, the manufacturing sector in West Virginia pays about a third more in weekly wages than the private sector as a whole.

But Gov. Tomblin got this one wrong … Take a look at this two-page summary put together to describe the calculations the American Chemistry Council did of the economic impact of locating a cracker plant in West Virginia (for that matter, take a look at this fancier one-pager put together by the council’s communications department).

Table 1 outlines the estimated ongoing (permanent) jobs that might be created if a company invests $3.2 billion in a major cracker facility here: About 12,300 total jobs. That figure includes 2,500 direct jobs, 6,300 indirect jobs and 3,500 induced jobs. As Kevin Swift, the council’s chief economist, just explained to me, that total number of jobs — the 12,000 figure the governor cited in his speech on statewide television and radio, before a joint session of the Legislature — includes all manner of jobs. It is not only direct manufacturing jobs, but positions with suppliers and support industries — everything from a waitress at a new cafe across the road from the plant to a doctor who starts a practice to serve residents in a growing community.

But they’re not all manufacturing jobs, and the ACC study doesn’t provide more detail that would give a clearer picture of how many jobs in various sectors with various levels of pay and benefits might be includes. You can get perhaps a bit more information by looking at the average wages for each category — $112,000 annually for direct jobs and $34,000 for indirect. But that’s a basic average, and may not tell the whole story.

For those who want to understand the methodology of the industry study, you might check out this more detailed analysis that looks more broadly at impacts from expansions of the chemical industry associated with the natural gas boom and any accompanying cracker plants. It’s also worth remembering that these industry-produced studies are not necessarily the most helpful source for these sorts of projections, as we’ve reported before here.