CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

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

16.2 ASSUMPTIONS............................................................................................................ 16-1

16.3 METHODOLOGY ........................................................................................................ 16-1

16.4 SHORT-TERM RESULTS............................................................................................ 16-2

16.5 LONG-TERM RESULTS.............................................................................................. 16-3

LIST OF TABLES

Table 16.4.1 Commercial clothes washer Net National Short-term Change in 

Employment (Number of Jobs).......................................................................... 16-3

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CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

16.1 INTRODUCTION

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 commercial clothes washers. Job increases or 

decreases reported in this chapter are separate from the direct commercial clothes washer

production sector employment impacts reported in the manufacturer impact analysis (Chapter 

12), and reflect the employment impact of efficiency standards on all other sectors of the 

economy. 

16.2 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 products, including the retail price plus sales tax, and increase installation 

costs. 

The ImSET input/output econometric model of the U.S. economy, this analysis estimated 

the short-term 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).

DOE notes that ImSET is not a general equilibrium forecasting model, and understands 

the uncertainties involved in projecting employment impacts, especially changes in the later 

years of the analysis.1 Because ImSET does not incorporate price changes, the employment 

effects predicted by ImSET would over-estimate the magnitude of actual job impacts over the 

long run for this rule. Since input/output models do not allow prices to bring markets into 

equilibrium, they are best used for short-run analysis. DOE therefore includes a qualitative 

discussion of how labor markets are likely to respond in the longer term. In future rulemakings, 

DOE may consider the use of other modeling approaches for examining long run employment 

impacts.

16.3 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 3.1.12 (Impact of Sector Energy Technologies) as a successor to ImBuild3

, a 

special-purpose version of the IMPLAN4 national input/output model. ImSET estimates the 

employment and income effects of building energy technologies. In comparison with simple 

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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 

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 products. The increased cost of products leads to higher employment in 

the product 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, 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.

DOE also notes that the employment impacts estimated with ImSET for the entire 

economy differ from the employment impacts in the commercial clothes washer manufacturing 

sector estimated in Chapter 12 using the Government Regulatory Impact Model (GRIM). The 

methodologies used and the sectors analyzed in the ImSET and GRIM models are different. 

16.4 SHORT-TERM RESULTS

The results in this section refer to impacts of commercial clothes washer standards 

relative to the base case. DOE disaggregated the impact of standards on employment into three 

component effects: increased capital investment costs, decreased energy costs, and changes in 

operations and maintenance costs. DOE presents the summary impact.

Conceptually, one can consider the impact of the rule in its first year on three aggregate 

sectors, the commercial clothes washer production sector, the energy generation sector, and the 

general consumer good sector (as mentioned above ImSET’s calculations are made at a much 

more disaggregate level). By raising energy efficiency, the rule generally increases the purchase 

price of commercial clothes washers; this increase in expenditures causes an increase in 

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employment in this sector. At the same time, the improvements in energy efficiency reduce 

consumer expenditures on energy, freeing up this money to be spent in other sectors. The 

reduction in energy demand causes a reduction in employment in utilities. Finally, based on the 

net impact of increased expenditures on commercial clothes washers and reduced expenditures 

on energy, consumer expenditures on everything else are either positively or negatively affected, 

increasing or reducing jobs in that sector accordingly. The model also captures any indirect jobs 

created or lost by changes in consumption due to changes in employment (e.g. as more workers 

are hired they consume more goods, which generates more employment; the converse is true for 

workers laid off).

Table 16.4.1 present the modeled net employment impact from the rule in 2019, rounded 

to the nearest ten jobs. As most commercial clothes washers are produced domestically, DOE 

does not model the impact of import spending for this product. 

Table 16.4.1 Commercial Clothes Washer Net National Short-term Change in 

Employment (Number of Jobs)

Trial 

Standard 

Level

2019 2024

TSL 1 10 40

TSL 2 10 50

TSL 3 -10 80

TSL 4 -30 50

For context, the Office of Management of Budget currently assumes that the 

unemployment rate may decline to 6.9% in 2014 and drop further to 5.3% in 2017.5 The 

unemployment rate in 2019 is projected to remain close to “full employment.” When an 

economy is at full employment any effects on net employment are likely to be transitory as 

workers change jobs, rather than enter or exit longer-term employment.

16.5 LONG-TERM RESULTS

Over the long term DOE expects the energy savings to consumers to increasingly 

dominate the increase in product costs, resulting in increased aggregate savings to consumers. As 

a result, DOE expects demand for energy to decline over time and demand for other goods to 

increase. Since the electricity generation and natural gas sectors are relatively capital intensive 

compared to the consumer goods sector, the net effect will be an increase in labor demand. In 

equilibrium, this should lead to upward pressure on wages and a shift in employment away from 

electricity generation towards consumer goods. Note that in long-run equilibrium there is no net 

effect on total employment since wages adjust to bring the labor market into equilibrium.

Nonetheless, even to the extent that markets are slow to adjust, DOE anticipates that net labor 

market impacts will in general be negligible over time due to the small magnitude of the short16-3
term effects presented in Table 16.4.1. The ImSET model projections, assuming no price or 

wage effects until 2024, are included in the second column of Table 16.4.1.

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REFERENCES

1. Scott, M., JM Roop, RW Schultz, DM Anderson, KA Cort, The Impact of DOE Building 

Technology Energy Efficiency Programs on U.S. Employment, Income, and Investment.

Energy Economics, 2008. 30(5): pp. 2283-2301 

2. 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. 

3. 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. 

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

Data Guide, 1997. Stillwater, MN. 

5. Office of Management and Budget, Fiscal Year 2012 Mid-Session Review: Budget of the 

U.S. Government, Washington, DC. 

<http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/12msr.pdf>

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