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CHAPTER 14: EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

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

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

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

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CHAPTER 14: EMPLOYMENT IMPACT ANALYSIS

14.1 INTRODUCTION

The Department will conduct an employment impact analysis for the Notice of Proposed

Rulemaking (NOPR). The Department’s employment impact analysis is designed to estimate

indirect national job creation or elimination resulting from possible standards, due to reallocation

of the associated commercial expenditures for purchasing and operating equipment. The

Department will estimate national impacts on major sectors of the U.S. economy, using publicly

available data and incorporating different energy price scenarios. The Department will make all

methods and documentation available for public review.

14.2 ASSUMPTIONS

If promulgated, the Department expects distribution transformer efficiency 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 commercial equipment, including the

retail price plus sales tax, and increase installation costs. 

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

year-to-year 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 of the economy. The Department intends this analysis to quantify the

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

impacts at manufacturers’ facilities in the manufacturer impact analysis (see Chapter 12).

14.3 METHODOLOGY

The Department has developed a spreadsheet model of the U.S. economy (IMBUILD),

focusing on the 35 sectors of the economy most relevant to industrial, commercial, and

residential building energy use.1

 IMBUILD is a special-purpose version of the Impact Analysis

for Planning (IMPLAN) national input-output model, which specifically estimates the

employment and income effects of building energy technologies.2 IMPLAN was developed

originally by the U.S. Forest Service, in cooperation with the Federal Emergency Management

Agency (FEMA) and the Bureau of Land Management (BLM), to assist the Forest Service in

land and resource management planning. The IMBUILD software includes a PC-based inputoutput model with structural coefficients to characterize economic flows among the 35 sectors. 

The Department may use the IMBUILD 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. 

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For example, distribution transformer standards may reduce energy expenditures and

increase equipment prices in the utility sector and the commercial and industrial sectors. These

expenditure changes are likely to reduce commercial and energy sector employment. At the same

time, transformer equipment standards may increase commercial sector investment, and increase

employment in other sectors of the economy. The Department designed the employment impact

analysis to estimate the year-to-year net employment effect of these different expenditure flows.

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REFERENCES

1. 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.

Prepared for the U.S. Department of Energy under Contract DE-AC06-76RLO 1830.

Report No. PNNL-11884. 

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

Data Guide, 1997. Stillwater, MN. 

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