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Wenzel: Sobering trends temper N.D.’s optimism

GRAND FORKS -- Congratulations are in order. North Dakota is the nation's best-run state, according to the news and opinion website 24/7 Wall Street.That's quite an achievement, and it's the fourth consecutive year the honor has been bestowed upo...

GRAND FORKS -- Congratulations are in order. North Dakota is the nation’s best-run state, according to the news and opinion website 24/7 Wall Street.
That’s quite an achievement, and it’s the fourth consecutive year the honor has been bestowed upon the Roughrider State.
Our quality-of-life ranking wasn’t listed in the 24/7 Wall Street study, but we probably would get high marks for that, too.
Categories that were ranked included:

  • Debt per capita: $2,481, which is the 18th lowest in the nation.
  • Unemployment rate: 2.8 percent, which is the lowest in the nation.
  • Median household income: $59,029, which ranks No. 15 nationally.
  • Poverty rate: 11.5 percent, which is the eighth lowest in the nation.

North Dakota’s high ranking is largely due to abundant natural resources, which have fueled the oil boom, the website notes. The mining industry contributed 2.5 percentage points to North Dakota’s 6.3 percent economic growth in 2014, and that’s the fastest growth rate of any state. Also, net migration over the five-year span leading up to 2014 accounts for 6.6 percent of North Dakota’s current population, 24/7 Wall Street reports. That, too, is the largest share of any state.
This is all good news. It certainly bodes well for GOP gubernatorial candidates who hope to take over for Republican Gov. Jack Dalrymple, overseer of the state’s boom years and who will step down as governor in 2016.
Yet there looms a question: Are North Dakota business leaders comfortable with the state’s economic climate, which has been so ballyhooed in the national media?
Some probably are, because it’s obvious certain business sectors are making money. But on the whole, North Dakota’s business community has to be concerned.
We’re proud of the state’s status, but worry because issues remain.

  • The euphoria surrounding the oil boom is fading. Oil was selling for $100 a barrel a year ago, but it quickly has trended downward into the $40 range. That $1.99 sign at the gas station is great for drivers, but it’s not so great for driving business in the state.

Just last week, Moody’s Analytics declared that “North Dakota’s oil boom has come to an end, and the state will underperform the nation for the next several years.” The state’s congressional delegation has long called for an end to America’s ban on exporting crude oil. Maybe they’re right.

  • Coal is being demonized by the U.S. Environmental Protection Agency. Earlier this year, the EPA’s Clean Power Plan called for a 45 percent reduction of carbon emissions in North Dakota, one of the nation’s top coal-producing states.

To meet these standards, power plants may have to close, and people may lose jobs. Even if plants don’t close, it would be foolish to think there’s going to be expansion - aka growth - in North Dakota’s lucrative, job-rich coal industry.

  • North Dakota’s other beacon industry - agriculture - is in a slide. Commodity prices have slumped, causing uncertainty. For example, farm implement giant Titan Machinery, whose headquarters is in West Fargo, this year consolidated and reduced its workforce. Also, ludicrous national concerns over genetically modified organisms are cutting into farm profits.
  • The Canadian dollar is weak, creating a decrease in traffic into North Dakota and especially Grand Forks. Southbound traffic is down, including a dramatic 31 percent decrease in August at the Pembina border crossing. Local businesses likely are feeling the effect.
  • The low unemployment rate coupled with a housing crunch is creating a potential vacuum for future North Dakota employers. Although unemployment is listed at 2.8 percent, it really is zero, because anyone who wants to work can do so. There are thousands of unfilled jobs in the state.

Businesses that are considering a move or expansion to North Dakota might be second-guessing the strategy, because they won’t act without a readily available workforce and affordable places for those workers to live. The moral here is to enjoy North Dakota’s status as a well-run state. It’s a great distinction, and one that has been earned.
Can North Dakota continue its streak in the face of all of this potential adversity? It won’t be easy.
But if it can, that’ll really be something to brag about.
Wenzel is the publisher of the Grand Forks Herald, which is a part of Forum News Service. Email him at kwenzel@gfherald.com .

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Opinion by Korrie Wenzel
Korrie Wenzel has been publisher of the Grand Forks Herald and Prairie Business Magazine since 2014.

He is a member of the Grand Forks Region Economic Development Corp. board of directors and, in the past, has served on boards for Junior Achievement, the South Dakota Historical Society Foundation, United Way, Empire Arts Center, Cornerstones Career Learning Center and Crimestoppers.

As publisher, Wenzel oversees news, advertising and business operations at the Herald, as well as the newspaper's opinion content.

In the past, Wenzel was sports editor for 14 years at The Daily Republic of Mitchell, S.D., before becoming editor and, eventually, publisher.

Wenzel can be reached at 701-780-1103, or via Twitter via @korriewenzel.
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