15 -i CHAPTER 15. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION ............................................................................................................ 15-1

15.2 ASSUMPTIONS ............................................................................................................... 15-1

15.3 METHO DOLOGY ........................................................................................................... 15-1

15.4 RESULTS ......................................................................................................................... 15-2

REFERENCES .......................................................................................................................... 15-3

LIST OF TABLES

Table 15.4.1 Net National Change in Employment Under Ballast TSLs .................................. 15-215 -1 CHAPTER 15. EMPLOYMENT IMPACT ANALYSIS

15.1 INTRODUCTION

The employment impact analysis is intended to estimate national job creation or job elimination resulting from proposed standards due to reallocation of associated commercial expenditures for purchasing and operating fluorescent lamp ballasts . The U.S. Department of Energy ( DOE ) conducted this analysis as part of the notice of proposed rulemaking ( NOPR ).

DOE estimated the impacts of standards on employment for product manufacturers, relevant service industries, energy suppliers, and the economy in general. Both indirect and direct employment impacts were covered. Direct employment impacts would result if energy conservation standards led to a change in the number of employees at manufacturing plants and related supply and service firms. Direct impact estimates are addressed in the manufacturer impact analysis ( c hapter 13 of the NOPR technical support document [TSD] ). Indirec t employment impact s affect the national economy in areas other than in the regulated manufacturing sector. Indirect impacts may result both from expenditures shifting among goods (substitution effect) and changes in income that lead to an adjustment in overall expenditure levels (income effect). DOE defines indirect employment impacts from energy conservation standards as net jobs eliminated or created in the general economy as a result of increased spending driven by the increased prices for regulate d products and reduced spending on energy.

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

Using an input/output (I

- O) econometric model of the U.S. economy, this analysis

estimate d 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’ facil ities in the manufacturer impact analysis (see NOPR TSD c hapter 13 ).

15.3 METHODOLOGY

DOE based its analysis on an I-O 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 using ImSET 3.1.1 1
(Impact of Sector Energy Technologies) to estimate the employment and income effects of building energy technologies. Compared 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 I-O 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. Because15 -2 d ifferent sectors have different levels of labor intensity , 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 estimate s of the change in national output for each I-O 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.

The following is an example of ho w the employment impact analysis might track impacts

from a standard for fluorescent lamp ballasts . Depending on the design options considered, one possible outcome is that the standards for these ballasts would reduce energy expenditures and increase equipment prices in the commercial sector. These expenditure changes may reduce commercial and energy sector employment. At the same time, the standard may increase investment in the commercial sector and employment in other sectors. DOE designed the employment impact analysis to estimate the annual net national employment impact of these types of expenditure flows.

15.4 RESULTS

Table 15.4.1 shows the net national employment imp act in 2020 and 2043, the final year of the analysis period, for ballasts

. Any initial decrease s in net employment would be caused by the dominance of capital costs 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 15.4.1 Net National Change in Employment Under Ballast TSLs

Analysis

Period

Year Trial

Standard

Level Net N ational C hange in J obs

thousands Existing Technologies,

Shift Emerging Technologies,

Roll

- up
2020 1 12.64 3.67

2 2.89 2.59

3 3.63 3.31

2043 1 123.75 31.79

2 63.21 37.07

3 89.47 51.0615 -3 REFERENCES

1. Roop, J. M., M. J. Scott, and R. W. Schultz. ImSET 3.1: Impact of Sector Energy Technologies. 2008 . Pacific Northwest National Laboratory: Richland, WA. Report No.

PNNL -18412.