Move over Wall Street titans and Silicon Valley giants. When it comes to paychecks, Big Oil now looks like the best bet for U.S. workers.
Spurred partly by the shale boom, the median pay for energy workers last year was $123,000, according to data newly mandated by the U.S. That topped all sectors, including utilities, tech and health care. While energy chief executives made an eye-popping 120 times more, the gap with their employees was still the second-smallest among all industries.
What’s fueling this paycheck potency? First, a reliance on geologists, petroleum engineers and other highly skilled professionals. Add to that the efforts needed to retain expertise — and lure young talent — after the recent oil price rout led to hundreds of thousands of job losses.
“They had to retain critical employees at almost any cost,” said Bill Arnold, a former Royal Dutch Shell executive who now teaches energy management at Houston’s Rice University.
Businesses across the country are dealing with labor shortages, and in the red-hot Permian shale basin in Texas and New Mexico, “you see it even more dramatically,” said Bob Sullivan of energy industry consultant AlixPartners. “At some point, the wage pressure starts to get pretty high.”
Oil and gas companies are essentially paying out now for two epic hiring slumps that followed price crashes in the mid-1980s, and again in the middle of this decade. They have forced the business to play catch-up, even as crude prices recover and drilling surges to records.
The 2010 Dodd-Frank financial reforms required public companies to disclose their CEO-to-worker pay ratio starting this year. The figure is calculated by dividing a CEO’s compensation package by the pay of the median employee, the one who makes more than half of the company’s workers and less than the other half.
“The roles and responsibilities that make up the sector tend to be highly skilled,” said Brian Blackwood, an executive compensation consultant with Willis Towers Watson in Minneapolis. “That’s what you need to play in this space.”
Producers and refiners staffed with highly trained, highly credentialed scientists, engineers and other professionals had the most generous median pay.
Oilfield service companies that employ the worker bees of the shale field — the mechanics, truck drivers and other blue-collar staff — dominated the bottom.
Alex Nussbaum writes for Bloomberg.