13-i

CHAPTER 13. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION ......................................................................................................... 13-1

13.2 ASSUMPTIONS............................................................................................................ 13-1

13.3 METHODOLOGY ........................................................................................................ 13-1

13.4 RESULTS ...................................................................................................................... 13-2

LIST OF TABLES

Table 13.4.1 CACHP and Furnace Net National Change in Employment............................. 13-4

Table 13.4.2 CACHP and Furnace Off-Mode Net National Change in Employment............ 13-7

LIST OF FIGURES

Figure 13.4.1 CACHP and Furnace Employment Impact of Increased Equipment Cost ........ 13-3

Figure 13.4.2 CACHP and Furnace Employment Impact of Operating Cost Savings ............ 13-3

Figure 13.4.3 CACHP and Furnace Net National Change in Employment............................. 13-4

Figure 13.4.4 CACHP and Furnace Off-Mode Employment Impact of Increased 

Equipment Cost.................................................................................................. 13-5

Figure 13.4.5 CACHP and Furnace Off-Mode Employment Impact of Operating Cost 

Savings............................................................................................................... 13-6

Figure 13.4.6 CACHP and Furnace Off-Mode Net National Change in Employment............ 13-6
13-1

CHAPTER 13. EMPLOYMENT IMPACT ANALYSIS

13.1 INTRODUCTION

DOE conducted an employment impact analysis for the final rule. DOE’s employment 

impact analysis is designed to estimate indirect national job creation or elimination resulting 

from possible standards, due to reallocation of the associated expenditures for purchasing and 

operating residential refrigeration products. 

13.2 ASSUMPTIONS

DOE expects energy conservation standards to decrease energy consumption, and 

therefore to reduce energy expenditures. The savings in energy expenditures may be spent on 

new investment or not at all (i.e., they may remain “saved”). The standards may increase the 

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

costs. 

Using an input/output econometric model of the U.S. economy, this analysis estimated 

the year-to-year effect of these expenditure impacts on net economic output and employment. 

DOE intends this analysis to quantify the indirect employment impacts of these expenditure 

changes. It evaluated direct employment impacts at manufacturers’ facilities in the manufacturer 

impact analysis (see Chapter 12).

13.3 METHODOLOGY

The Department based its analysis 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 Pacific Northwest National Laboratory developed the 

model, ImSET 3.1.11 (Impact of Sector Energy Technologies) as a successor to ImBuild2

, a 

special-purpose version of the IMPLAN3 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 energy-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 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., 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 187-sector model of the national economy to predict the economic effects 

of residential and commercial buildings technologies. ImSET collects estimates of initial 

investments, energy savings, and economic activity associated with spending the savings 

resulting from standards (e.g., changes in final demand in personal consumption, business 

investment and spending, and government spending). It provides overall estimates of the change 
13-2

in 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 calculates impacts on national 

employment and wage income.

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 appliances. The increased cost of appliances leads to higher 

employment in the appliance manufacturing sectors and lower employment in other economic 

sectors. Second, commercial firm and residential spending are redirected 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 utilities 

experience relative reductions in demand which leads to reductions in utility sector investment 

and employment.

13.4 RESULTS

The results in this section refer to impacts of CACHP and furnace product standards 

relative to the respective base cases for the two types of products for each trial standard level.. 

DOE disaggregated the impact of standards on employment into two component effects: 

increased capital investment costs and changes in operations and maintenance costs (including 

significant decreases in energy costs). 

In addition, this section presents impacts of the standards for off-mode power, which has its own 

set of trial standard levels. 

Figures 13.4.1 summarizes the employment impacts of the increased investment and 

spending on higher-efficiency equipment to meet the CACHP and furnace products trial standard 

levels . Although appliance manufacturing is relatively capital-intensive compared to other 

sectors of the economy, construction, installation, and activities contributing to wholesale and 

retail markups are labor-intensive, the net result is a moderate increase in national employment.
13-3

Figure 13.4.1 CACHP and Furnace Employment Impact of Increased Equipment Cost

Figure 13.4.2 shows the employment impact of redirected spending made possible by 

appliance operating cost savings. In this case, the employment impact is strongly positive. 

Figure 13.4.2 CACHP and Furnace Employment Impact of Operating Cost Savings

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2012 2017 2022 2027 2032 2037 2042

Incremental Jobs (thousands)

Year

TSL 1

TSL 2

TSL 3

TSL4

TSL 5

TSL 6

TSL 7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2012 2017 2022 2027 2032 2037 2042

Incremental Jobs (thousands)

Year

TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

TSL 6

TSL 7
13-4

Figure 13.4.3 shows the estimated net national employment impacts of the CACHP and 

furnace trial standard levels. For any given year, these figures 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). These figures show the 

combined effects of equipment cost, operations and maintenance cost, and energy use changes 

due to standards. 

Figure 13.4.3 CACHP and Furnace Net National Change in Employment

Table 13.4.1 shows the net national employment impact in specific years for each 

product. The initial increase in net employment mainly is caused by the investment in early 

years, while the impacts of operating cost savings from reduced energy use build up slowly over 

time, resulting in a net positive impact on employment in later years. 

Table 13.4.1 CACHP and Furnace Net National Change in Employment

TSL Net National Change in Employment (Thousands of Jobs)

2016 2020 2025 2030 2035 2040) 2045 

1 0.3 0.6 1.0 0.8 0.8 0.6 0.5

2 1.0 2.0 3.0 3.1 3.0 2.9 2.7

3 1.9 3.9 5.4 6.1 6.4 6.3 6.1

4 2.7 4.7 6.0 6.5 6.7 6.5 6.3

5 2.6 4.9 6.5 6.9 7.0 6.7 6.3

6 6.7 12.0 16.0 17.6 18.7 19.0 18.5

7 26.0 44.2 60.2 68.3 75.7 79.7 81.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

2012 2017 2022 2027 2032 2037 2042

Incremental Jobs (thousands)

Year

TSL1

TSL2

TSL3

TSL 4

TSL 5

TSL 6

TSL7
13-5

The investment required to meet the off-mode trial standard levels is a small fraction of 

the amount required to meet the trial standard levels that apply to energy consumption when the 

CACHP and furnace products are operating. In addition, the energy savings are commensurately 

smaller. All of the additional investment required to meet off-mode product standards is 

assumed to be spent for additional manufacturing cost, which is capital intensive and generates 

only a few extra jobs in the economy. The impacts of redirected expenditures are very small, as 

shown in Figures 13.4.4-13.4.6 and in.Table 13.4.2. In Figure 13.4.4, the impacts of TSL 1 and 

TSL 2 are so close together that they appear as the same line.

 Figure 13.4.4 CACHP and Furnace Off-Mode Employment Impact of Increased 

Equipment Cost

0.00

0.01

0.01

0.02

0.02

0.03

0.03

0.04

0.04

0.05

2012 2017 2022 2027 2032 2037 2042

Incremental Jobs (thousands)

Year

TSL 1

TSL 2

TSL 3
13-6

Figure 13.4.5 CACHP and Furnace Off-Mode Employment Impact of Operating Cost 

Savings

Figure 13.4.6 CACHP and Furnace Off-Mode Net National Change in Employment

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2012 2017 2022 2027 2032 2037 2042

Incremental Jobs (thousands)

Year

TSL 1

TSL 2

TSL 3

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2012 2017 2022 2027 2032 2037 2042

Incremental Jobs (thousands)

Year

TSL1

TSL2

TSL3
13-7

Table 13.4.2 CACHP and Furnace Off-Mode Net National Change in Employment

TSL

Net National Change in Employment (Thousands of Jobs)

2016 2020 2025 2030 2035 2040) 2045 

1 0.05 0.17 0.32 0.46 0.60 0.71 0.80

2 0.05 0.18 0.35 0.50 0.64 0.76 0.86

3 0.08 0.23 0.42 0.59 0.76 0.90 1.02
13-8

REFERENCES

1. M. J. Scott, O.V. Livingston, J.M. Roop, R.W. Schultz, and P.J. Balducci, ImSET 3.1: 

Impact of Sector Energy Technologies; Model Description and User’s Guide,

http://www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf

2009. 

Available at:

2. Scott, M. J., D. J. Hostick, and D. B. Belzer, ImBuild: Impact of Building Energy 

Efficiency Programs, April, 1998. Pacific Northwest National Laboratory. Richland, WA. 

Report No. PNNL-11884. Prepared for the U.S. Department of Energy under Contract 

DE-AC06-76RLO 1830. 

3. Minnesota IMPLAN Group Inc., IMPLAN Professional: User's Guide, Analysis Guide, 

Data Guide, 1997. Stillwater, MN.