The “green economy,” “green collar jobs,” and other greeny-weeny nonsense have become all the rage these days. President Obama, when talking about economic recovery, emphasized the importance of the so-called “green economy.” He said this while in Pennsylvania in early 2009:
That’s all fine and good, except for the part about actually creating jobs that “pay well” and “can’t be outsourced.”
Obama thinks that by passing laws, government can effectively direct the economy. Somehow, in Obamaworld, by investing (wasting) 150 billion dollars and enacting renewable energy mandates, he “just might save this planet for our children.”
Even if you put aside Mr. Obama’s high-minded rhetorical flourishes, his plan for green jobs is impossible. Yes, new jobs will be created in renewable energy because of your mandates, Mr. Obama, but how many more jobs will be lost in traditional energy sectors? And how much money will be sucked down the black-hole of government “investment” before your utopian dreams come true? That’s money that could be better spent by the American people, creating actual jobs that are in demand, rather than artificially demanded through government mandates and coercive action.
Green jobs are a myth. As Mark Hemingway reports in today’s Washington Examiner, newly-enacted “green” regulations are stifling jobs growth:
Federal regulatory spending on environmental issues has increased an incredible 7,372 percent between 1960 and 2006.
This explosion of regulation of everything remotely connected to the use of land, air and water adds to American taxpayers’ daily burdens, increases the cost of doing business, and destroys millions of jobs, sometimes even whole industries.
Often, the regulation is to aid creatures like the Tennessee snail darter fish. The consequences for human beings can range from minor inconveniences to economic catastrophe.
Regulatory compliance costs are skyrocketing. According to a Small Business Administration report titled “The Impact of Regulatory Costs on Small Firms,” the total cost of complying with federal regulations is $1.1 trillion a year as of 2004. That’s more than $10,000 per household. The cost of regulatory compliance was just $7,000 in 1995 — up 30 percent in less than a decade.
Of that total, environmental regulation is estimated to cost $221 billion a year, second only to a broadly defined category of “economic regulation.”
The SBA also reports that environmental regulation is the leading regulatory expense for businesses with fewer than 20 employees, at $3,296 per worker.
Overall, regulatory costs are 45 percent higher for small businesses than for larger firms, and environmental regulations are the “main cost drivers in determining the severity of the disproportionate impact on small firms,” according to the SBA. Compliance with environmental regulations costs 364 percent more for small firms than large firms.
Since the vast majority of American businesses are small, the effect these regulations have on job creation and the broader economy is enormously negative.
Hemingway also points out some other unintended consequences of regulations (like how the EPA increases automotive crash mortality, for example).
When it comes to green jobs, they either replace non-green jobs or are part of regulation compliance. Either way, green jobs are actually job killers. And in the process of killing jobs, the government also spends an exorbitant amount of non-existent money borrowed from China.
For the purpose of creating jobs, then, a “clean-energy economy” will not offer a panacea. This does not necessarily mean that America should not become green to alleviate climate change, to kick its addiction to foreign oil or to use energy sources more efficiently. But those who take great pains to tout the “job-creation potential” of the green space might just end up inducing labor pains all around.
Mr. Sharan also looks at a specific example of Obama’s green proposals: smart-grid technology. In other words, fancy technology would make the energy grid more efficient.
The Obama administration allocated a little more than $4 billion in funding from the American Recovery and Reinvestment Act to the smart grid, an unprecedented amount for a hitherto-neglected but critical piece of our national infrastructure. Much of this is to be spent installing close to 20 million “smart meters” over the next five years. Smart meters are digital versions of the spinning electric meters that are omnipresent nationwide. Whereas spinning meters have changed little in more than a century and must be read by workers, smart meters automatically transmit electricity consumption data to a utility. Virtually eliminating human intervention, smart meters promise more accurate measurement of electricity usage as well as increasingly efficient management of energy production resources.Nearly 40 million smart meters have been deployed worldwide, mostly in Europe. Jobs created in this industry can be broadly classified into four categories: installation, manufacturing, research and development, and IT services.
First, installation: It typically takes a team of two certified electricians half an hour to replace the old, spinning meter. In one day, two people can install about 15 new meters, or about 5,000 in a year. Were a million smart meters to be installed in a year, 400 installation jobs would be created. It follows that the planned U.S. deployment of 20 million smart meters over five years, or 4 million per year, should create 1,600 installation jobs. Unless more meters are added to the annual deployment schedule, this workforce of 1,600 should cover installation needs for the next five years.
Although a surge of new digital meters will be produced, the manufacturing process is highly automated. And with much of it accomplished overseas, net creation in domestic manufacturing jobs is expected to be only in the hundreds. In R&D and IT services, high-paying white-collar jobs are on the horizon, but as with manufacturing, the number of jobs created is forecast to be in the hundreds or low thousands.
Now let’s consider job losses. It takes one worker today roughly 15 minutes to read a single meter. So in a day, a meter reader can scan about 30 meters, or about 700 meters a month. Meters are typically read once a month, making it the base period to calculate meter-reading jobs. Reading a million meters every month engages about 1,400 personnel. In five years, 20 million manually read meters are expected to disappear, taking with them some 28,000 meter-reading jobs.
In other words, instead of creating jobs, smart metering will probably result in net job destruction. This should not be surprising because the main method of making the electrical grid “smart” is by automating its functions. Automation by definition obviates the need for people.
Smart meters are a great idea and probably necessary for the future of energy consumption. Unfortunately, it will also kill jobs. Obama should stop pretending that his green B.S. is going to create jobs. It’s not.
As the Wall Street Journal points out, when tried in Germany, “costly government handouts more likely destroyed than created jobs, and stifled rather than promoted technological innovation—and all without reducing CO2 emissions.” Additionally:
But what about the jobs argument? A government can always put people to work in any number of ways. But “green” jobs turn out to be a uniquely expensive proposition. A study published last year by researchers at King Juan Carlos University in Madrid showed that Spain, which copied much of Germany’s system and which Mr. Obama also looks to as a model, spends €570,000 ($794,000) to get one worker employed at a solar-panel assembly line. As for the “sustainability” of those jobs, RWI notes that “It is most likely that whatever jobs are created by renewable energy promotion would vanish as soon as government support is terminated.” Translation: “green jobs” means taxpayer subsidies unto eternity.
Green jobs also mean forfeited opportunities, as subsidies crowd out jobs in the traditional energy-generation sector, job losses from the drain on the economy as a result of higher energy prices, consumers’ loss of purchasing power and the misallocation of funds from more productive investments. As RWI warned, “Governments should scrutinize the logic of supporting energy sources that cannot compete on the market in the absence of government assistance.” To which we would only add that here’s a case where President Obama really could benefit from studying the European model.
Sadly, when President Obama sees the European model, he wants to copy it, rather than run away from it in the opposite direction. If you’d like to read more, please read the full articles that I hyperlinked too. Additionally, check out a great article about Spain’s green economy disaster at Investor’s Business Daily.
Green jobs are a myth. A very expensive one.