The `new poor' in the oil patch. They slipped from the middle class, without much safety net
Midland, Texas — Everyone knows there's a slump in the oil patch, precipitated by a decline in oil prices that accelerated to a free fall in late 1985. There have been national stories of vacant skyscrapers in Houston, of wildcatters hocking their Rolex watches, and of former Texas governor and treasury secretary John Connally auctioning off prize livestock to pay his debts. But pawned Rolexes and overextended high rollers do not tell the full story of oil-producing states where the dreams of an economic boom turned into the nightmares of a bust. It is also the story of people who for the first time have found themselves in an unemployment line, a food line, or grateful for a new job that barely keeps basics on the shelves or a roof overhead.
Although some of the people in Texas, Oklahoma, and Louisiana who are out of work, or working for half or one-third of what they used to make, would have been considered poor before the boom, others have never known anything less than a middle-class standard of living. They are, in that sense, the ``new poor.'' And their slide down the economic ladder is compounding the problems of a region that already had more than its share of the ``old,'' traditional poor.
The bleak picture is repeated in other oil producing states such as Alaska, Colorado, Kansas, and Wyoming. But this series focuses on the three Southern states that comprise the original ``oil patch.''
Business statistics partly delineate the problem. According to Dunn & Bradstreet, Texas, Oklahoma, and Louisiana accounted for 21 percent of all the nation's business failures in the first half of 1987. And 27 percent of the bank failures in the United States between 1984 and the first quarter of 1987 occurred in Texas and Oklahoma, according to the Federal Deposit Insurance Corporation.
But business figures don't reveal the hardships that the downturn has wreaked on tens of thousands of individuals and families. Oil-related employment in Texas, Oklahoma, and Louisiana has dropped 38 percent since 1981-82; per capita income in those states is well below the national average, and the gaps are widening; and in those states home foreclosures as a percentage of outstanding mortgages greatly exceed the US average.
Oilfield to burger stand
There have been reports in recent weeks of renewed optimism in the oil patch, as the price of oil has stabilized above $18 a barrel - still nowhere near the $35 zenith reached early in the decade, but well above the $14 bottom scraped in 1986. Unemployment rates have declined from last year's highs, although Louisiana's rate hovers above 13 percent, the highest in the nation.
But for many of the new poor, the hopeful reports offer little consolation.
Try telling Celia Ratliff, as Time magazine announced in a recent story on the oil producing states, that ``the dip is history.''
A year ago, the Ratliffs owned four acres in west Texas near Odessa. ``Along with the land we had a new trailer house, two horses, and two nice cars,'' says Mrs. Ratliff, the mother of four children, ``but we lost all of it.''
Her husband used to make $20,000 a year in the oilfield, but now the Ratliffs' only income is the $150 to $200 she makes every two weeks at a burger stand. ``I used to consider myself middle class,'' she says, ``but right now I feel very poor.''
Oil-rig graveyards and ghost towns
Augustan Santos has his doubts about good times in the oil patch as well. ``Until this I always had a regular job, always,'' says the Houston father of five, who lost his $2,500-a-month job with an oilfield pipe company early in 1986.
As he waits in line for rice, butter, and cheese at a surplus-commodities giveaway, Mr. Santos says he has friends who are ``in the same boat'' he is - although one licensed electrician he knows managed to find a job at a fast-food restaurant. ``I guess you'd call me the new poor,'' says Santos, whose job was one of 200,000 to vanish in Houston since 1982.
``The good news [about the oil patch],'' says Raymond Hefner, chairman of the Independent Petroleum Association of America, ``is that a few folks are guardedly whistling again. The bad news is that many of them are whistling through graveyards of oil-field equipment and ghost towns of producing states.''
For many families in this region, the oil boom meant that for the first time they could plug into the American promise of a high wage and middle-class living. But for a lot of them, it didn't last long. And with about half of all new jobs paying the minimum wage, the good times are unlikely to return soon.
``I don't like the term `new poor,''' says Harold Gross of at the Center for Enterprising at Southern Methodist University (SMU) in Dallas, ``because it implies that poverty is a new phenomenon in this region, and it's not.'' Dr. Gross says that only for a short time during the early '80s did the region approach national income levels, ``and that was very short-lived.''
A more accurate term, he says, would be ``poverty revisited,'' or what Alexander Holmes, Oklahoma state director of finance, terms the ``new-old poor.''
Yet the fact remains that many people in the region are facing what are, for them, stark new realities.
``Middle-class anxiety - that's what's different about this recession,'' says Richard Santos, a social economist at Southwestern University. ``Individuals in white-collar jobs lost those jobs, and they had to cope with that for the first time.''
Until November 1983, Harold Reid was making about $70,000 a year as vice-president of a Houston oil-field service company. But then his company sold out as the industry shrank, and since then he and his family have lived primarily on savings, plus $730 a month he receives in social security payments.
``But the house payment alone is $750,'' Mr. Reid says. ``For 40 years I was never without a paycheck for more than a week. I've been through the ups and downs in oil, but I've never seen this.''
Reid hopes to sell his house before all his savings are eaten up, and to move to a mobile home somewhere in the country. ``My standards have changed,'' he says.
Energy-belt states, with their high esteem for individual ``get up and go'' and low regard for government assistance, have traditionally fallen near the bottom of state rankings for unemployment benefits, workers compensation, and welfare programs generally.
For example, Texas, Oklahoma, and Louisiana, unlike about half of all states, have not expanded aid to families with dependent children (AFDC) coverage to include families with unemployed, as opposed to absent, fathers. This summer unemployment compensation in Louisian was cut 7 percent as part of a package to trim the state's unemployment-compensation debt with the federal government.
Many social welfare analysts believe attitudes about public assistance have discouraged these states from developing the networks that would enable them to receive their ``fair share'' of federal assistance for such things as food assistance, utility payments, and housing.
Small safety net
``The safety net in Texas and neighboring states is certainly less developed than in states like Michigan or Illinois or Ohio,'' says Henry Brauer, executive director of Gulf Coast Community Services Agency in Houston.
``We've heard so much all our lives about welfare,'' adds Don Horn, head of the AFL-CIO in Houston, ``but the fact is ... there's not a whole lot out there.''
Zy Weinberg, director of the Texas Association of Community Action Agencies, says he has been tracking food-stamp participation for about 10 years. Although he has seen numbers go up with the downturn in the oil sector - about 200,000 more requests than last year, he says - he still estimates that little more than a third of eligible Texas families are receiving foodstamps.
``That's partly because the state doesn't exactly make it easy to get them, but it's also people's attitudes,'' says Mr. Weinberg. ``Folks don't want to be branded with the welfare stigma.''
Still, many families have been surprised to discover that if there are two parents living in the home and a late-model car or something else of high value in the families' possession public assistance is not available.
``Many have had to depend on unemployment [benefits] until that ran out, and then they turn to charitable groups,'' says Harrell Rogers, dean of the College of Social Sciences at the University of Houston. Churches, civic groups, and labor organizations have increasingly become involved in providing such services as food distribution, housing advice, and stress- and career-counseling, he says.
For many with new jobs, the shock has come in the form of greatly reduced wages. ``For a worker who has built a life and family around a job at $10 to $14 an hour, it's tough to go to that service job at $4 to $5 an hour,'' says Mr. Horn.
On the road again
For others, the only alternative has been to move. Thousands of families that came to the energy states during the boom have moved back home.
``There was a tremendous increase in employment during a 10-year period,'' says Timothy Ryan, director of the division of business and economic research at the University of New Orleans. ``Many of those jobs were filled by people from outside the state, and when [the jobs] disappeared, the people left.''
Even more prevalent is what SMU's Gross calls ``intraregional'' migration. For the more fortunate, the inducement to move came from companies that centralized shrinking operations at their headquarters. But for others, it was the need to replace lost employment.
``People in the more heavily oil-related parts of Texas or the Oklahoma panhandle have moved their families to places like Dallas to accept jobs in lower-paying services,'' says Gross. Moving does not help, of course; last year Dallas alone lost more than 30,000 jobs.
Houston's freeways are noticeably less congested than a year or two ago, and oil-service companies in towns like Midland and Lafayette, La., sit shuttered and locked. Yet while some rural areas that bloomed with the boom are dying out, many families, usually those with deeper roots, are determined to stay put.
``In my part of the state people have been through rough times before,'' says Susan Hall, a training supervisor with the Oklahoma department of Human Services in Enid, Okla.
``Not everyone went to California during the Dust Bowl [of the 1930s],'' she says, ``and those who've stayed this time are going to stick it out. This is part of the Bible belt,'' she adds, ``and people here say, `Times are tough, but they're not as tough as we are.'''
First of three articles. Tomorrow: Rugged individualism vs. relief.