by Adam James, Jorge Madrid, and Bracken Hendricks
A lot of bogus numbers are flying around about green jobs these days. It’s time to set the record straight: Clean energy is a bright spot in the economic recovery, already creating large numbers of high quality U.S. jobs in emerging industries. Cleantech (primarily clean energy) has seen “torrid growth” from 2003 to 2010, 8.3% per year — almost double the growth rate of the overall economy during that time.
What began as a concerted smear campaign, started by a small number of conservative pundits to score political points during an election year, has unfortunately picked up steam in mainstream news outlets. Recently, the New York Times distorted the record on clean energy jobs and missed the real news story. In this post, we take these arguments head on and set the record straight on green jobs.
Reality: Critics are actively and unethically smearing a crucial American industry
Earlier this month, President Obama visited a Johnson Controls plant in Holland, Michigan that is being brought on line with the help of Recovery Act funds, to manufacture advanced batteries in the U.S.A. for state of the art electric vehicles. In order to encourage development of three separate next-generation facilities for researching and producing batteries for clean cars, the government issued a $299 million grant to Johnson Controls.
In the first quarter of this year, this project had already created 148 jobs on a path to hiring 3,000 workers. According to the website www.recovery.gov:
“In preparation for building a new plant we have created positions necessary to manage the plant, manage the plant launch, and specify plant layout and required equipment, strategic sourcing, and to put plant system infrastructure in place. We have created positions necessary to hire plant staff and provide the on-boarding and technical training for new employees.”
However, a frenzy of conservative news outlets used the opportunity to claim that the jobs created at the plant cost federal taxpayers $2 million per person. (By simply dividing $299 million by 148 jobs outlined in the recovery.gov report, you conveniently get $2.02 million per job.)
That number is absolutely wrong and purposefully misleading.
The original article, whose headline boldly read “OBAMA VISTS CORPORATION WHERE HIS STIMULUS CREATED ‘GREEN’ JOBS AT $2 MILLION PER JOB” quietly admits further down in the article that this price is true only “if no more jobs are added.” Not surprisingly, the headline was not circulated with this critical disclaimer.
The article also failed to mention that development is less than 50% complete, less than one third of the funds have been spent, and further expansion will create thousands of jobs in the coming years. According to Johnson Controls, around 3,000 jobs will be created in the construction and operation of three separate facilities built with the $299 million grant.
That means the federal government is actually creating one job with every $100,000 spent on the project – not $2 million as this misleading coverage asserts. This investment in jobs actually compares very favorably to job creation from other types of energy projects. According to U.S. Government statistics, the “price” of job creation is $145,000 per job for coal projects, over $193,000 per job in the oil and gas industry favored by conservative commentators, and a whopping $238,000 per job created from nuclear energy, or more than twice the cost per job when compared to energy efficiency.
In addition, there are numerous other companies that will be supplying equipment for the plant – thus creating more indirect jobs. Neither the federal government nor Johnson Controls has hard numbers for this additional employment.
What we have here is a success story — an American industry rising from the ashes during a time when the American people need it the most. However, because conservatives view this success for Americans as a concurrent success for progressives, they are willing to throw it under the bus. What else is down there?
Reality: The Recovery Act worked, creating real jobs in clean energy.
Conservatives love to claim that the clean energy investments in the American Recovery and Reinvestment Act (ARRA) were a complete bust, and failed to produce the jobs touted by the administration and advocates. Not only is their assessment grossly premature, but they are missing the point and overlooking the real facts about this program.
ARRA was designed to be a short-term investment to kick start the economy; it was never intended to be a save-all for our collapsing markets. ARRA prevented economic calamity in the short run with public sector investment into private industries – saving jobs and driving demand for goods and services at a time when consumers were not spending and banks were not lending.
The non-partisan Congressional Budget Office found that through the first quarter of 2011, the stimulus created between 1.6 million and 4.6 million jobs, increased real GDP by between 1.1 and 3.1 percent, and reduced unemployment by between 0.6 and 1.8 percentage points. This number is supported by the Presidents own Council of Economic Advisors report, who find that the stimulus created or saved 2.7 million to 3.7 million jobs by the third quarter of 2010. This job creating effect was found to be the case in six major analysis of ARRA, including one from The National Bureau of Economic Research which stated, “The stimulus had a positive, statistically significant effect on employment…aid to low-income people and infrastructure spending showed very positive impacts.”
Furthermore, if the ARRA had been an energy bill, it would arguably have been the single-most important piece of clean energy legislation in our nation’s history. It drove unprecedented new investments — both public and private — into modernizing America’s clean energy infrastructure. ARRA provided financing tools and signaled clear demand to investors. This helped U.S. businesses rebound, got new projects built, and put Americans back to work.
Three separate programs for energy efficiency retrofits – Weatherization Assistance Program (WAP), Energy Efficiency Block Grant Program, and State Energy Programs – have collectively upgraded over half a million (530,000) buildings and employed almost 25,000 Americans since the programs began to ramp up from April 1, 2011 and June 30, 2011.
To be sure, these programs experienced growing pains, as many were funded for the first time under ARRA, and an initial ramp up period for the energy efficiency programs was expected in the design of the two year Recovery Act spending plan. Despite the relatively slower start, however, progress has built steadily, and is moving rapidly now that these programs are solidly in place. Although a recent NY times mischaracterized WAP as ‘not catching on,’ the programs is actually on track and will meet the programs goal of retrofitting 600,000 homes ahead of schedule; having already reached 80 percent of its goal by June of 2011. On top of that, according to a recent study by a DOE national laboratory, these weatherization services have saved families an average of more than $400 in energy costs during the first year, providing those family budgets with a perpetual “stimulus check” in additional disposable income that will continue each year as they spend less on wasted energy.
Another grossly premature and misleading attack by The Seattle PI recently bashed the city’s Community Power Works Program as a “bust” 4 months into its 2 year single family homes project. However, in the past 4 months, CPW has set up worker training programs (set to impact 2,000 jobs) and begun its energy assessment program that has generated contracts for $11.8 million in energy efficiency upgrades. CPW needed time to train and place these workers, but they already have an inventory of over 400 homes waiting for upgrades – calling it a “bust” 4 months into the program is shoddy journalism at best.
Moving beyond Recovery Act investments under ARRA, the Obama Administration continues to show leadership in promoting job creation through efforts like its Better Buildings Initiative (BBI), which aims to make commercial buildings 20 percent more efficient by 2020. Through strong leadership in catalyzing public-private partnerships, the administration has already secured commitments to over $500 million in private financing for retrofit projects to create at least 300,000 new U.S. jobs according to independent analysis conducted by Architecture 2030. For each $1 billion in BBI commercial building efficiency tax credits, the program will generate $16.4 billion in new private spending and $3.6 billion in new federal tax revenue. The program will not only pay for itself, but will also reduce deficit spending by $2.6 billion.
In addition, three other clean energy programs from ARRA have also had significant impact on job creation. The Treasury cash grant in lieu of a tax credit (known as the 1603 program), the advanced energy manufacturing tax credit (known as the 48C program), and the Department of Energy loan guarantee program—have cost the government about $7 billion—less than 1 percent of Recovery Act funding—but have leveraged more than $12 billion in private capital and account for more than 13 percent of the jobs created directly by Recovery Act funding.
This is the real track record of clean energy spending under the Recovery Act. Far from being a bust, green jobs are real and these strategic public investments have already helped put American’s back to work, even as we locked in long-term consumer savings and built market share for U.S. companies in strategic industries that enhance America’s global competitiveness.
Reality: Clean energy creates over three times more jobs (and better jobs) than fossil fuels
In an economy where the unemployment rate tops 9%, every dollar the federal government invests in job creation counts. Average Americans no longer have the luxury of characterizing government spending politically- it must be evaluated practically. This means trying to weigh the pros and cons of government spending as if it were a business investment.
Despite the fundamentally flawed criticism of green jobs that has been thrown around recently, there are some concrete numbers that must frame job creation.
First of all, green jobs mean more jobs over all. Studies show that across a range of clean projects including renewable energy, transit, and energy efficiency, for every million dollars spent, 16.7 green investment jobs are created. That is over three times the 5.3 jobs per million dollars that are created from the same spending on fossil fuel industries.
Second, clean energy jobs mean more American jobs, with more U.S. content than other industries. Most of the products used in energy efficiency retrofits for example have over 90% of the content made right here in the USA. Sheet metal for duct work, for example is over 99% domestically sourced, vinyl windows are 98% American made, and rigid foam insulation is over 95% made in America. Even major mechanical equipment like furnaces (94% made in the U.S.A.) and air conditioning and heat pups (82% American made) have a much larger share of U.S. content than other products, with the domestic share of production for all products in the United States hovering just above 76%.
So when you build green, you are far more likely to be buying American, putting aside the fact that you can’t outsource the construction labor. That is very good news for the hard hit U.S. manufacturing sector, especially in building and construction materials, which desperately need a boost during this down real estate market.
Third, clean energy jobs are better jobs in well documented ways.
Clean energy jobs have better wages: When considering job creation output, the quality of jobs created must be considered. While we already know that green jobs out-perform fossil fuel jobs in terms of quantity of jobs created per million invested; the table below also indicates that green jobs are better jobs.
This fact is also supported by the Brookings Institute, which finds that the median salaries for clean energy jobs are $46,343, or about $7,727 more than the median wages across the broader economy.
Clean energy jobs grew despite the recession: Remarkably, the clean economy grew by 8.3% over the 2 year economic dip from 2008 to 2010. That is nearly double the average growth (4.2%) of the overall economy from 2003 to 2010. Sadly, the NY Times didn’t read down that far when they looked into the landmark Brookings study.
Clean energy jobs are better for U.S. small businesses: Looking closely at the specialty trades that perform energy retrofits shows very high rates of small business participation in the construction. In fact 91% of the firms involved in retrofits are actually small businesses. Insulation, for example, is installed by more than 22,000 firms, 85 percent of which employ less than 20 people. Roofing insulation is installed by nearly 20,000 contractors around the country, 88 percent of which employ less than 20 people.
Windows are manufactured and installed by more than 130,000 people working for nearly 7,000 firms in the United States, 82 percent of which employ less than 20 people. The production and installation of HVAC equipment employs around 2 million people in the United States, and nearly 90 percent of them work for firms of less than 20 people. While nearly 850,000 people manufacture or install interior or exterior lighting equipment in the United States—nearly 90 percent of whom work for firms of less than 20 people. This is a big deal for struggling small and family businesses in the United States, who provide the real engine for new hiring in our economy.
So investment in green jobs provides more jobs. It provides better jobs. It stimulates the hardest hit sectors of the economy in construction, manufacturing, and small businesses. It increases U.S. competitiveness and improves our balance of trade, even during recession.
If you were trying to run the government like a forward-thinking business, where would you put your money?
Bracken Hendricks is a Senior Fellow at the Center for American Progress; Adam James is a Special Assistant for Energy Policy at the Center for American Progress; Jorge Madrid is a Research Associate on the Energy Team at the Center for American Progress. Climate Progress Blogger Stephen Lacey contributed to this story.