12-1

-90.0

-80.0

-70.0

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

2006 2011 2016 2021 2026

Year

Jobs (Thousands)

Trial Standard 1

Trial Standard 2

Trial Standard 3

Trial Standard 4

Trial Standard 5

Figure 12.1 Net National Employment Impacts

CHAPTER 12: NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

Net national employment impacts from central air conditioner efficiency standards are

defined as net jobs created or eliminated in the general economy as a consequence of: (1) reduced

spending by end users on energy; (2) reduced spending on new investment or capacity by energy

companies; (3) increased spending on the purchase of new central air conditioners; (4) increased

spending on the installation of new central air conditioners; and (5) the associated indirect effects

of those four factors throughout the national economy. 

 Figure 12.1 shows the estimated net national employment impacts of five different trial

standard levels. These trial standard levels are discussed in greater detail in the analyses of

Shipments (Chapter 6) and National Energy Savings and Net Preset Value (Chapter 7). Figure 12.1

shows, for any given year, the change in the number of jobs in the economy relative to the number

of jobs if there were no change in standards (and thus no resulting change in spending and cash flow

patterns throughout the economy). Table 12.1 shows the net national employment impact in specific

years.

EE-RM-STD-98-440 COMMENT 241ZZ
12-2

Table 12.1 Net National Change in Jobs

Trial Standard Level 2010

(thousands)

2020

(thousands)

2030

(thousands)

1 -7.8 -2.7 -0.7

2 -16.9 -7.9 -4.7

3 -20.7 -10.8 -7.5

4 -33.4 -22.3 -19.4

5 -75.0 -74.9 -75.4

These results are based on an input/output model of the U.S. economy that estimates the

effects of standards on major sectors of the economy related to buildings and the net impact of

standards on jobs. The model, ImBuild, was developed for DOE’s Office of Building Technology,

State and Community Programs.1

 ImBuild (which stands for Impact of Building Energy Efficiency

Programs) was created by the Pacific Northwest National Laboratory as a special-purpose version

of the IMPLAN national input-output model.2

 It was developed to estimate the employment and

income effects of building energy technologies. In comparison with simple economic multiplier

approaches, ImBuild allows for more complete and automated analysis of the economic impacts of

energy-efficiency investments in buildings.

Energy-efficiency technology affects the U.S. economy primarily through three mechanisms.

First, if the incremental costs of the new technology per installed unit are different from those of the

conventional technology, changes in purchases will occur in the sectors involved in manufacturing,

distribution, and installation for both technologies, which will change the overall mix of economic

activity. Second, depending on how the efficiency investment is financed, it may “crowd out” other

domestic savings, investments, and consumer spending, somewhat reducing overall economic

activity. Third, energy expenditures will be reduced. On one hand, this reduction lowers final

demand in the electric and gas utility sectors (and the fuel oil production and distribution sector) as

well as in the trade and services sectors that provide maintenance, parts, and services for the utility

and fuel sectors. On the other hand, it increases net disposable household income and increases

general consumer spending in all sectors (including some increases in expenditures for electric and

gas utility services and retail trade and services).

ImBuild is written in Visual Basic and Excel. It uses a 35-sector model of the national

economy to predict the economic effects of residential and commercial buildings technologies. It

has a user-friendly, menu-driven front end to facilitate input. ImBuild collects user-supplied

estimates of initial investments, energy savings, and economic activity associated with spending of

the savings resulting from standards (changes in final demand in personal consumption, business

investment, and government spending) and 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.

EE-RM-STD-98-440 COMMENT 241ZZ
12-3

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

deletion in the manufacturing sector. Direct employment impacts, i.e., those that would occur at

central air conditioner manufacturing plants, are discussed in the Manufacturer Impact Analysis

(Chapter 8).

Figure 12.1 shows the cumulative net increase or decrease in jobs resulting from central air

conditioner efficiency standards for each year to the year 2030. The least number of jobs lost is for

Trial Standard Level 1. 

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 so changes in the level of spending (e.g., such as

the effects of an efficiency standard) in one sector of the economy will affect flows in others, which

affects the overall level of employment. 

Jobs are created when the net change in spending flows into more job-intensive sectors

relative to the base case; jobs are lost when the net change in spending flows into less job-intensive

sectors relative to the base case. An energy-efficiency standard for central air conditioners will

create such changes in the spending flows of the economy. Standards will reduce central air

conditioner operating costs, which will in turn increase the amount of disposable income to

consumers. There are two basic reasons why energy cost savings (driving job creation) increase after

a standard is implemented: (1) households buy higher-efficiency central air conditioners compared

to the base-case scenario and (2) the total number of central air conditioners in the country increases

over time, generating a greater potential for energy savings. These central air conditioners are

bought by consumers who would have bought a lower-efficiency central air conditioner if a higherefficiency standard were not implemented. 

A standard may also increase purchase price (reducing disposable income to consumers) and

increase the demand for capital in the central air conditioner manufacturing industry. The central

air conditioner manufacturing industry is more capital-intensive than average, so an increase in

spending flows to it will initially tend to reduce the employment level in the overall economy.

The impact on jobs has been disaggregated into the component effects. Figure 12.2 shows

the impact on jobs of consumer energy savings. While consumers save money by using more

efficient central air conditioners thereby giving them more money to spend in other more laborintensive sectors of the economy; the trial standards entail large increases in purchase price which

reduces their spending in other parts of the economy. The final result is a net decrease in jobs

throughout the economy.

EE-RM-STD-98-440 COMMENT 241ZZ
12-4

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

2006 2011 2016 2021 2026

Year

Jobs (Thousands)

Trial Standard 1

Trial Standard 2

Trial Standard 3

Trial Standard 4

Trial Standard 5

Figure 12.2 Employment Impacts of Consumer Savings

Figure 12.3 shows the employment impacts of the increased first cost of more efficient

central air conditioners. This higher first cost is reflected in the decrease in jobs shown in the figure.

Because manufacturing is capital-intensive, less investment capital is available for other purposes

EE-RM-STD-98-440 COMMENT 241ZZ
12-5

-800.0

-700.0

-600.0

-500.0

-400.0

-300.0

-200.0

-100.0

0.0

2006 2011 2016 2021 2026

Year

Jobs (Thousands)

Trial Standard 1

Trial Standard 2

Trial Standard 3

Trial Standard 4

Trial Standard 5

Figure 12.3 Employment Impacts of Changes in Equipment Cost

Figure 12.4 shows the change in employment resulting from energy savings. When

consumers use less energy, electric utilities experience relative reductions in demand. Reduced

demand results in less investment in new capacity and hence lower employment in these sectors.

The effect on jobs because of the impact on utilities is also small. The energy savings for each of

the fuel sources are shown in the National Energy Savings and Net Present Value Analysis (Chapter

7).

EE-RM-STD-98-440 COMMENT 241ZZ
12-6

-7.0

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2006 2011 2016 2021 2026

Year

Jobs (Thousands)

Trial Standard 1

Trial Standard 2

Trial Standard 3

Trial Standard 4

Trial Standard 5

Figure 12.4 Employment Impacts of Utility Savings

. 

EE-RM-STD-98-440 COMMENT 241ZZ
12-7

2. Minnesota IMPLAN Group, Inc., IMPLAN Professional: User’s Guide, Analysis Guide,

Data Guide, 1997. Stillwater, MN.

REFERENCES

1. Pacific Northwest National Laboratory, ImBuild: Impact of Building Energy Efficiency

Programs, 1998. Richland, WA. Prepared for the U.S. Department of Energy under Contract

DE-AC06-76RLO 1830.

EE-RM-STD-98-440 COMMENT 241ZZ