Stories

America’s surprise economic powerhouse: North Dakota

Data: U.S. Census Bureau via Brookings, Opportunity Insights; Note: “Economic mobility” is measured as the average income percentile of children whose parents were in the lowest income quartile; Graphic: Harry Stevens/Axios

The newest U.S. economic hotspot is not in or near Silicon Valley, New York, or any tech corridor, but in the northern plains — specifically oil-infused North Dakota.

What's happening: This region, in the middle-north of the country, leads the nation in a string of economic indicators since the financial crash, according to a new report by the Brookings Institution. And North Dakota is atop the bunch.

Why it matters: Commentators often refer to the middle of the U.S. as a single entity, like "middle America" or, more pejoratively, "flyover country." This makes the economic vitality of the northern plains all the more striking.

  • As is clear in the chart above, most working-age adults in the region have jobs. And people born into low-income households are moving into the middle class with greater ease than other Americans.
  • The top six metro areas in terms of upward mobility — defined as the average income of people with the poorest parents — are all in the northern plains.

The region's' prosperity has been driven in part by a massive expansion of shale oil and gas production in the Bakken region of North Dakota and elsewhere in the region.

  • "Energy creates cyclical but significant job creation, small firm growth, and consumer activity," Mark Muro, who co-authored the report, tells Axios.

The boom has driven North Dakota to the top of the economic indicators:

  • Its wage growth has been 2.3% a year, compared with 0.8% for the rest of the country.
  • 80.9% of the state's working-age population was working, second only to Minnesota, at 81.1% — again leading the country.
  • In hard economics, GDP per capita in North Dakota rose at 3% a year, the fastest in the country; productivity grew at a sizzling at 2.4% annual growth, while it was flat for the rest of the nation.
  • North Dakota also had the 10th-lowest poverty rate in the country, at 10.5%; Minnesota was the fourth-lowest at 9.9%.

But, but but ... The boom has brought growing crime, especially against women, and environmental destruction.

  • "This economic prosperity has come with devastating social by-products," says Richard Edwards, director of the Center for Great Plains Studies at the University of Nebraska. “We are paying a high, high price for such ‘prosperity.’”

Other factors, in addition to the fracking boom, have buttressed the region's economy.

  • In rural areas, depopulation has resulted in better wages for those left behind. "Demand for an increasingly limited number of individuals is resulting in an increase in income" and better job prospects, Joe Brusuelas, chief economist of RSM US, tells Axios.
  • And in cities such as Omaha, Lincoln, Sioux Falls, and the Twin Cities, industries are thriving along with the rest of the country. Employers can easily find workers among migrants from the surrounding countryside, said Edwards, the University of North Dakota professor.

Go deeper:

More stories loading.