CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS 

TABLE OF CONTENTS 

15.1 ASSUMPTIONS............................................................................................................... 15-3

15.2 METHODOLOGY ........................................................................................................... 15-3

15.3 RESULTS ......................................................................................................................... 15-4

REFERENCES .......................................................................................................................... 15-6

LIST OF TABLES 

Table 15.3.1 Net National Change in Jobs for Class A BVMs by TSL ................................. 15-5

Table 15.3.2 Net National Change in Jobs for Class B BVMs by TSL.................................. 15-5

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CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS 

Employment impact is one of the factors that the U.S. Department of Energy (DOE) 

considers in selecting a standard for refrigerated beverage vending machines (BVMs). 

Employment impacts include direct and indirect impacts. Direct employment impacts are any 

changes in the number of employees for BVM manufacturers, their suppliers, and related service 

firms. Indirect impacts are those changes of employment in the larger economy that occur due to 

the shift in expenditures and capital investment that is caused by the purchase and operation of 

more efficient BVM equipment. The manufacturer impact analysis in this rulemaking addresses 

only the employment impacts on manufacturers of BVMs (i.e., the direct employment impacts; 

see chapter 13, Manufacturer Impact Analysis, of the technical support document [TSD]); this 

chapter describes other, primarily indirect, employment impacts. 

15.1 ASSUMPTIONS 

If promulgated, DOE expects BVMs’ amended energy conservation standards to decrease 

the national energy consumption and therefore reduce energy expenditures. The savings in 

energy expenditures may be used on new investment or not at all (i.e., they may remain “saved”). 

The amended energy conservation standards may increase the purchase price (i.e., equipment 

price plus sales tax) and installation costs of BVMs. 

Using an econometric model of the U.S. economy, this analysis estimated the year-toyear effect of these expenditure impacts on net economic output and employment. DOE intended 

this analysis to quantify the indirect employment impacts of reduced expenditures for energy and 

reallocation of that money toward other sectors of the economy. 

15.2 METHODOLOGY 

DOE defines the net national employment impacts resulting from proposed amended 

energy conservation standards for BVMs as the net national change in jobs in the general 

economy. The key factors affecting the outcome of net change in jobs are: (1) increased spending 

on the purchase and installation of BVM equipment meeting the amended standards, (2) reduced 

customer spending on electricity, (3) reduced spending on new investment or capacity by energy 

companies, and (4) the associated indirect effects of the above. 

DOE based its analysis on the Impact of Sector Energy Technologies (ImSET) model 

developed by Pacific Northwest National Laboratory for DOE’s Office of Energy Efficiency and 

Renewable Energy.1

 ImSET is a personal computer-based, economic analysis model that 

estimates the effects of standards on major sectors of the U.S. economy related to buildings and 

the net impact of standards on jobs. ImSET’s input/output structure is based on the 1997 

Benchmark U.S. table aggregated to 188 sectors to estimate the employment and income effects 

of building energy technologies.2 Compared with simple economic multiplier approaches, 

ImSET allows for more complete and automated analysis of the economic impacts of energyefficiency investments in buildings. 

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In an input/output model, the level of employment in an economy is determined by the 

relationship of different sectors of the economy and the spending flows among them. Different 

sectors have different levels of labor intensity and changes in the level of spending (e.g., due to 

the effects of an amended energy conservation standard) in one sector of the economy will affect 

spending in other sectors, which in turn will affect the overall level of employment. 

ImSET collects estimates of initial investments, energy savings, and economic activity 

associated with spending the savings resulting from amended standards (e.g., changes in final 

demand in personal consumption, business investment and spending, and government spending). 

It provides overall estimates of the change in national output for each input-output sector. Then, 

the model applies estimates of employment and wage income per dollar of economic output for 

each sector and calculates impacts on national employment and wage income. 

ImSET calculates the total effect of standards on employment, including job creation or 

deletion, in the manufacturing sector. As described above, DOE analyzed the direct employment 

impacts (i.e., those that would occur at the manufacturing plants of BVM equipment) in the 

manufacturer impact analysis (chapter 13).

Energy-efficiency technology primarily affects the U.S. economy along three spending 

pathways. First, general investment funds are diverted to sectors that manufacture, install, and 

maintain energy efficient technologies. The increased cost of technology leads to higher 

employment in the air-conditioner manufacturing sector, including BVMs and lower 

employment in other economic sectors. Second, commercial firm spending is redirected from 

utilities toward firms that supply commercial production inputs. Third, electric utility sector 

investment funds are released for use in other sectors of the economy. When customers use less 

energy, electric utilities experience relative reductions in demand, which leads to reductions in 

utility sector investment and employment. 

15.3 RESULTS 

The results show the total effects of amended energy conservation standards on 

employment for the selected years. 

Table 15.3.1 shows the estimated net national employment impacts of the seven different 

trial standard levels (TSLs) for the Class A BVM equipment. A detailed discussion of the TSLs 

can be found in chapter 9, Trial Standard Levels, of the TSD). The figure shows that for a given 

year over the period of analysis (2012–2042), the change in the number of jobs in the economy 

relative to the number of jobs if there were no change in standards and hence no resulting change 

in spending and cash flow patterns throughout the economy.

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Table 15.3.1 Net National Change in Jobs for Class A BVMs by TSL 

Trial Standard Net National Change in Jobs (number of jobs)

Level (TSL) 2012 2022 2032 2042 

TSL 1 0 10 13 14 

TSL 2 3 50 57 64 

TSL 3 5 113 132 146 

TSL 4 9 173 203 226 

TSL 5 9 204 239 265 

TSL 6 9 223 262 292 

TSL 7 -61 220 267 304 

Similarly, Table 15.3.2 shows the net national employment impacts of the amended BVM 

energy conservation standards by trial standard level and specified years for the entire and BVM 

markets. 

Table 15.3.2 Net National Change in Jobs for Class B BVMs by TSL 

Trial Standard Net National Change in Jobs (number of jobs)

Level (TSL) 2012 2022 2032 2042 

TSL 1 0 3 4 4 

TSL 2 0 5 5 6 

TSL 3 0 24 29 33 

TSL 4 0 28 34 38 

TSL 5 -19 66 80 90 

TSL 6 -78 39 56 68 

As shown in Table 15.3.1 and Table 15.3.2, the proposed BVM standards have virtually 

no initial impact on jobs and have a small, positive impact on jobs in later years. This is 

explained by the fact that the required initial investment in the standard-compliant equipment 

costs a few jobs because the investment is capital-intensive relative to other spending in the 

economy that would be displaced to pay for the investment. However, in the long term, the 

benefit to the economy of the energy savings from the installed equipment more than makes up 

for the initial investment, and the net effect on employment is positive. The long-term positive 

and increasing impact occurs because the energy savings in future years are obtained from both 

current and previous efficiency investments reflected in the installed stock of efficient 

equipment, while investment costs for the equipment occur only once. 

In conclusion, DOE estimates that net indirect employment impacts from a proposed 

BVM standard are positive but very small. 

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REFERENCES 

1. Scott, M.J. et al. ImSET: Impact of Sector Energy Technologies. 2005. Pacific Northwest 

National Laboratory, Richland, WA. Prepared for the U.S. Department of Energy under 

Contract DE-AC05-76RLO1830. 

2. Lawson, A. M., K. S. Bersani, M. Fahim-Nader, and J. Guo. Benchmark Input-Output 

Accounts of the U. S. Economy, 1997. Survey of Current Business. 2002. December: 

pp. 19-117. 

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