Out of Control Policy Blog

The Green Job Debate

California Sen. Barbara Boxer wrote last week that we need to invest more money in green energy to create jobs and save the economy:

The carefully crafted Climate Security Jobs bill that we will present to the Senate, based on the Waxman-Markey bill, will jump start our economy, protect consumers, stop the ravages of unchecked global warming, and ensure that America will be the leading economic power in this century.

Here is the reality: as renewable energy becomes more popular, and used more, it will take more people to manage those resources, design the technology, and operate the systems. Those are new jobs that have never been created before. So any money invested in green energy will create jobs. No question. But that is not the issue. Job "creation" should be viewed in the aggregate, not in nominal terms. Because for every green job that is created, at least one or more traditional energy jobs are lost. There isn't an automatic increase in the number of people employed just because green jobs are created.

Consider the state if Michigan, the pit of economic despair in America (in a close battle with California). In a move to try and fast track the war on climate change and "create jobs" Gov. Granholm and Co. have been working towards "greening" the Wolverine state. Last October, Michigan set a standard of having at least 10% of energy used in the state be from renewable sources by the year 2015. The city of Detroit plans to have nearly 750 MW of energy come from renewable sources by the same date. And all of that will involve spending which will create jobs and help businesses. But not in the aggregate.

And here is why. Renewable energy is more efficient. It doesn't require as many people to manage as traditional energy. The Detroit energy company DTE could wind up firing 40% of its work force by 2015 as a result of the energy shift if everything goes according to plan. That is not a job creation act.

This is not to say we should avoid green energy to save jobs. But we shouldn't force states and cities to adopt the technology faster than they are willing to with government subsidies because that only hurts the economy. The nation is avoidably shifting towards renewable energy. Given the scarce resources that we have it has to happen. But making it happen sooner than a natural shift isn't a job creator nor is it the boon Sen. Boxer claims it to be.

To further illustrate this point, consider the evidence that Sen. Boxer offers to prove her theory.

Take the acid rain program established in the Clean Air Act Amendments of 1990. The naysayers said it would cost consumers billions in higher electricity rates, when in reality the opposite happened, and electricity rates declined an average of 19 percent between 1990 and 2006. The naysayers also said that cost to business would be more than $50 billion a year, when in reality the health and other benefits of the program outweighed the costs 40 to 1. Another charge was that it would cost the economy millions of jobs. In reality, the American economy grew by 20 million jobs between 1993 and 2000, as the economy grew 64 percent.

Are we to believe that the Clean Air Act was the cause of economic growth in the 1990s? No, and I don't Sen. Boxer is trying to necessarily claim that. But what Sen. Boxer is missing is what might have been created without the Clean Air Act. Perhaps there would have been 30 million jobs between 1993 and 2000 created without the Act. Maybe not. The point is, there are often unseen consequences that aren't taken into account.

If all you want to do is count the green jobs created, you'll get a nice statistic. But if you count all the jobs that are lost because of the green energy shift, or try to calculate the jobs that could have been created if taxes were cut by the amount spent to achieve the green energy goals, then green doesn't seem to be the economic boon it's thought to be.

Anthony Randazzo is Director of Economic Research


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