CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

16.1 INTRODUCTION ......................................................................................................... 16-1

16.2 METHODOLOGY ........................................................................................................ 16-1

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CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

16.1 INTRODUCTION

The U.S. Department of Energy (DOE)’s employment impact analysis estimates indirect 

national job creation or job elimination resulting from possible new standards, due to reallocation 

of the associated expenditures for purchasing and operating equipment. DOE will conduct this

analysis for the notice of proposed rulemaking (NOPR). DOE will estimate national impacts on 

major sectors of the U.S. economy, using publicly available data.

Energy conservation standards can impact employment both directly and indirectly. Direct 

employment impacts are changes in the number of employees at the plants that produce the 

covered products, along with the affiliated distribution and service companies, resulting from 

standards. DOE will evaluate direct employment impacts in its manufacturer impact analysis, as 

described in chapter 12 of this preliminary technical support document. The employment impact 

analysis described in this chapter covers indirect employment impacts which may result from 

expenditures shifting between goods (the substitution effect) and changes in income and overall 

expenditure levels (the income effect) that occur due to the implementation of standards.

DOE expects new or amended energy conservation standards to decrease energy 

consumption, and therefore to reduce expenditures for energy. The savings in energy 

expenditures may be spent on new investment and other items. The standards may increase the 

purchase price of products, including the retail price plus sales tax, and may increase installation 

costs.

Using an input-output model of the U.S. economy, the employment impact analysis seeks 

to estimate the year-to-year effect of these expenditure impacts on net national employment.

DOE intends the employment impact analysis to quantify the indirect employment impacts of 

these expenditure changes.

16.2 METHODOLOGY

To investigate the combined direct and indirect employment impacts, DOE will use the 

Pacific Northwest National Laboratory (PNNL)’s “Impact of Sector Energy Technologies”

(ImSET 3.1.1) model.1 PNNL developed ImSET, a spreadsheet model of the U.S. economy that 

focuses on 187 sectors most relevant to industrial, commercial, and residential building energy 

use, for DOE’s Office of Energy Efficiency and Renewable Energy. ImSET is a special-purpose 

version of the U.S. Benchmark National Input-Output (I-O) model, which has been designed to 

estimate the national employment and income effects of energy saving technologies that are 

deployed by DOE’s Office of Energy Efficiency and Renewable Energy. In comparison with the 

previous versions of the model used in earlier rulemakings, this version allows for more 

complete and automated analysis of the essential features of energy efficiency investments in 

buildings, industry, transportation, and the electric power sectors.

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The ImSET software includes a computer-based I-O model with structural coefficients to 

characterize economic flows among the 187 sectors. ImSET’s national economic I-O structure is 

based on the 2002 Benchmark U.S. table, specially aggregated to 187 sectors.2

DOE intends to use the ImSet model to estimate changes in employment in the overall 

U.S. economy resulting from changes in expenditures in the various sectors of the economy.

DOE designed the employment impact analysis to estimate the year-to-year net national 

employment effect of these different expenditure flows.

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REFERENCES

1. Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact of Sector Energy 

Technologies, 2005. Pacific Northwest National Laboratory. Richland, WA. Report No. 

PNNL- 15273. 

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: pp. 19-117.

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