CHAPTER 15. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION

......................................................................................................... 15-1 15.2 METHOD

...................................................................................................................... 15-1 15.3 RESULTS

...................................................................................................................... 15-2 15.3.1 Increased Capital Investment Cost Impacts

................................................................... 15-2 15.3.2 Decreased Energy and Water Costs Impacts

................................................................. 15-3 15.3.3 Changes in Operations and Ma intenance Costs Impacts

............................................... 15-4 15.3.4 Net National Employment Impacts

................................................................................ 15-5

LIST OF TABLES

Table 15.3.1 Commercial Clothes Washer s Net National Change in Jobs

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

LIST OF FIGURE Figure 15.3.1 Commercial Clothes Washer Em ployment Impact of Increased Equipment Cost

.................................................................................................................... 15-3 Figure 15.3.2 Commercial Clothes Washer Employment Impact of Energy and Water Figure 15.3.3 Commercial Clothes Washer Employment Impacts of Operations and Savings

............................................................................................................... 15-4

Maintenance Cost Increase

................................................................................ 15-5 Figure 15.3.4 Commercial Clothes Washer Net National Employment Impacts

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

15-iCHAPTER 15. EMPLOYMENT IMPACT ANALYSIS

15.1 INTRODUCTION

The Department defines net national empl oyment impacts from commercial clothes washer efficiency standards as net jobs crea ted or eliminated in the general economy as a consequence of: (1) increased spending on the purc hase and installation of new appliances; (2) reduced spending on electricity, na tural gas, and water; (3) reduc ed spending on new investment or capacity by energy companies; (4) changes in operation and maintenance costs; and (5) the associated indirect effects of the above. This chapter presents information and result s pertaining solely to CCWs. As described in section 1.3 of chapter 1 of this technical s upport document (TSD), DOE is continuing the rulemaking for energy conservation standards fo r microwave oven standby power, and analyses related to these products will be published in a separate TSD. In addition, DOE issued a final rule 1 adopting energy conservation standard s for conventional cooking products ( i.e. , cooktops and ovens) and microwave oven energy factor (EF), and details of the analyses for these products are contained in the co rresponding final rule TSD. 2

15.2 METHOD The Department based its analysis on an input/output model of the U.S. economy that estimates the effects of standards on major sector s of the economy related to buildings and the net impact of standards on jobs. The Pacifi c Northwest National Laboratory developed the model, ImSET 3 (which stands for Im pact of S ector E nergy T echnologies) as a successor to ImBuild 4 , a special-purpose version of the IMPLAN 5 national input/output model. ImSET estimates the employment and income effects of building energy technologies. In comparison with simple economic multiplier approaches, ImSET allows for more complete and automated analysis of the economic impacts of ener gy-efficiency investments in buildings. In an input/output model, the level of employment in an economy is determined by the relationship of different sectors of the econom y and the spending flows among them. Different sectors have different levels of labor intensity and so changes in the level of spending (e.g., due to the effects of an efficiency standard) in one sector of the economy will affect flows in other sectors, which affects the overall level of employment.

ImSET uses a 188-sector model of the natio nal economy to predict the economic effects of residential and commercial buildings technologies. ImSET collects estimates of initial investments, energy savings, and economic activ ity associated with spending the savings resulting from standards (e.g., changes in fi nal demand in personal consumption, business investment and spending, and government spending) . It provides overall estimates of the change

15-1in national output for each input-output sector. The model applies estimates of employment and wage income per dollar of economic output for each sector and calcula tes impacts on national employment and wage income. Energy-efficiency technology primarily a ffects the U.S. economy along three spending pathways. First, general investment funds are dive rted to sectors that manufacture, install, and maintain energy-efficient appliances. The incr eased cost of appliances leads to higher employment in the appliance manufacturing sect ors and lower employment in other economic sectors. Second, commercial firm spending are redi rected from utilities toward firms that supply production inputs. Third, electric utility sector investment funds are released for use in other sectors of the economy. When consumers use less energy, electric utiliti es experience relative reductions in demand which leads to reductions in utility sector investment and employment.

15.3 RESULTS The results in this section refer to imp acts of commercial clothes washer standards relative to the base case. DOE disaggregated the impact of comm ercial clothes washer standards on employment into three component effects: increased capital investment costs, decreased energy and water costs, and changes in operations and maintenance costs.

15.3.1 Increased Capital Investment Cost Impacts Figures 15.3.1 shows the employment impacts of the increased investment and spending on more-efficient equipment. Because appliance manufacturing is relatively capital-intensive compared to other sectors of the economy, th e net result is a small loss of employment.

15-2-0.03 -0.025

-0.02 -0.015

-0.01 -0.005 0 2013 2018 2023 2028 2033 2038 2043

YearIncremental Jobs (1000) TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Figure 15.3.1 Commercial Clothes Washer Employment Impact of Increased Equipment Cost

15.3.2 Decreased Energy and Water Costs Impacts Figures 15.3.2 shows the employment impact of redirected spending made possible by appliance energy savings. In this case, the employment impact is strongly positive, increasing employment in the sectors that supply these fi rms with production, inve stment, or financial inputs. Due to an error in the distribution of water savings in ImSET, DOE adds the dollar value of water savings to electricity savings, as the cost multipliers and labor intensity of the water sector and the electricity ge neration sector are similar.

15-30 0.1 0.2 0.3 0.4 0.5 0.6 0.7

2013 2018 2023 2028 2033 2038 2043 YearIncremental Jobs (1000) TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Figure 15.3.2 Commercial Clothes Washer Empl oyment Impact of Energy and Water Savings

15.3.3 Changes in Operations and Maintenance Costs Impacts Figures 15.3.3 shows the employment impact s of non-energy operations and maintenance cost increases for commercial clothes washers. Repair and maintenance is comparatively laborintensive, so the net result is a small increase in employment.

15-40 0.005

0.01 0.015

0.02 0.025

2013 2018 2023 2028 2033 2038 2043 YearIncremental Jobs (1000) TSL 1, 2 TSL 3 TSL 4 TSL 5

Figure 15.3.3 Commercial Clothes Washer Employment Impacts of Operations and Maintenance Cost Increase

15.3.4 Net National Employment Impacts Figures 15.3.4 show the estimated net nationa l employment impacts of the commercial clothes washer trial standard leve ls. For any given year, these figur es show the net change in the number of jobs in the economy relative to if there were no change in standards (and thus no resulting change in spending and cash flow patterns throughout the economy). Table 15.3.1 shows the net national employment impact in specific years.

15-5-0.1 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

2013 2018 2023 2028 2033 2038 2043

YearIncremental Jobs (1000) TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Figure 15.3.4 Commercial Clothes Washer Net National Employment Impacts

Table 15.3.1 Commercial Clothes Washers Ne t National Change in Jobs

Trial Standard Level 2013 (thousands) 2020 (thousands) 2030 (thousands) 2043 (thousands) 1 2 3 4 5 0

. 0 0 0

. 0 0 0

. 0 1 0

. 0 1 0

. 0 2 0

. 0 4 0

. 0 5 0

. 2 5 0

. 2 8 0

. 3 4 0

. 0 6 0

. 0 7 0

. 3 9 0

. 4 4 0

. 5 3 0

. 0 7 0

. 0 8 0

. 4 6 0

. 5 2 0

. 6 2

15-6REFERENCES

1 U.S. Department of Energy-Office of En ergy Efficiency and Re newable Energy, Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and Electric and Gas K itchen Ranges and Ovens) and for Certain Commercial and Industrial Equipment (Com mercial Clothes Washers); Final Rule. Federal Register , 2009. 74(66): pp. 16040-16096.

2 U.S. Department of Energy-Office of Energy Efficiency and Renewable Energy. Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Residential Dishwa shers, Dehumidifiers, Cooking Products, and Commercial Clothes Washers , March, 2009. Washington, DC. < http://www1.eere.energy.gov/buildings/appliance_standards/residentia l/cooking_products_final_rul e_tsd.html >

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

. Pacific Northwest National Laboratory. July 2005.

4 Scott, M. J., D. J. Hostick, and D. B. Belzer, ImBuild: Impact of Building Energy Efficiency Programs , April, 1998. Pacific Northwest Nationa l Laboratory. Richland, WA. Report No. PNNL-11884. Prepared for the U.S. Departme nt of Energy under Contract DE-AC06-76RLO 1830.

5 Minnesota IMPLAN Group, Inc., IMPLAN Professional: User’s Guide, Analysis Guide, Data Guide , 1997. Stillwater, MN.

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