CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

14.1 INTRODUCTION ............................................................................................................ 14­1

14.2 ASSUMPTIONS............................................................................................................... 14­1

14.3 METHODOLOGY ........................................................................................................... 14­1

REFERENCES .......................................................................................................................... 14­3

14­i 

 EE-2006-STD-0126 COMMENT 11.2
14­ii

 EE-2006-STD-0126 COMMENT 11.2
CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS

14.1 INTRODUCTION

The employment impact analysis is intended to estimate national job creation or job

elimination resulting from new standards, due to reallocation of the associated commercial

expenditures for purchasing and operating equipment. The U.S. Department of Energy (DOE)

will conduct this analysis as part of the Notice of Public Rulemaking (NOPR). DOE will

estimate national impacts on major sectors of the U.S. economy, using publicly available data

and incorporating different energy price scenarios to be conducted as part of the analysis for the

NOPR. DOE will make all methods and documentation available for review.

14.2 ASSUMPTIONS

DOE expects new commercial refrigeration equipment standards to decrease energy

consumption, and thereby reduce commercial expenditures for energy. The savings in energy

expenditures may then be spent, for example, on new commercial investment. On the other

hand, energy efficiency standards may increase the purchase price of commercial refrigeration

equipment, including the retail price plus sales tax, and increase installation costs.

Using an input­output model of the U.S. economy, this analysis seeks to estimate the

year­to­year effect of these expenditure impacts on net economic output and employment.

A simple model might involve reduced expenditures for energy and reallocation of that money

toward other sectors in the economy. DOE intends this analysis to quantify the indirect

employment impacts of these expenditure changes. It will evaluate direct employment impacts

in the manufacturer impact analysis step of the process.

14.3 METHODOLOGY

DOE developed a spreadsheet model of the U.S. economy (ImSET) focusing on

1 188 sectors most relevant to industrial, commercial, and residential building energy use.

ImSET is a special­purpose version of the U.S. Benchmark National Input­Output (I­O) model,

which has been designed specifically to estimate the national employment and income effects of

the deployment of Office of Energy Efficiency and Renewable Energy (EERE) – developed

energy­saving technologies. 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.

The ImSET software includes a PC­based I­O model with structural coefficients to

characterize economic flows among the 188 sectors. ImSET lends itself to assessing the impacts

of evaluating buildings, power, industrial, and transportation technologies. ImSET’s national

2 economic I­O structure is based on the 1997 Benchmark U.S. table, specially aggregated to

188 sectors. The central processing code is written in FORTRAN code.

The time scale of the model is 50 years. The model is a static I­O model, which allows a

great deal of flexibility concerning the types of energy efficiency effects that can be

accommodated. For example, certain economic effects of energy efficiency improvements

14­1

 EE-2006-STD-0126 COMMENT 11.2
require an assessment of inter­industry purchases. Some energy efficiency investments will not

only reduce the costs of energy but the costs of labor and other goods and services as well. In

the language of economics, this represents an investment­specific increase in productivity and

value addeda and a change to the I­O structure, differing from a case in which a constant I­O

structure is applied to a change in investment. DOE may use the ImSET model to estimate

changes in employment, industry output, and wage income in the overall U.S. economy resulting

from changes in expenditures in the various sectors of the economy.

For example, commercial refrigeration equipment standards may reduce energy

expenditures and increase equipment prices in the commercial sector. These expenditure

changes are likely to reduce commercial and energy sector employment. At the same time, these

equipment standards may increase commercial sector investment, and increase employment in

other sectors of the economy. DOE designed the employment impact analysis to estimate the

year­to­year net employment effect of these different expenditure flows.

a Value­added is the difference between the value of the output of a sector and the costs of the purchased goods and

services that go into the sector. It is mainly composed of labor and proprietor income, retained earnings of

corporations, rents and taxes.

14­2

 EE-2006-STD-0126 COMMENT 11.2
REFERENCES

1 Roop, J.M., M.J. Scott, and R.W. Schultze. 2005. ImSET: Impact of Sector Energy

Technologies. PNNL­15273. Pacific Northwest National Laboratory, Richland, WA.

2 Lawson, A.M., K.S. Bersani, M. Fahim­Nader, and J. Guo. 2002. “Benchmark Input­Output

Accounts of the U.S. Economy, 1997, “Survey of Current Business, December, pp. 19­117.

14­3

 EE-2006-STD-0126 COMMENT 11.2