.• 

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U.S. Department of Energy June 1999 

NET NATIONAL EMPLOYMENT RESULTS 

Net national employment impacts from clothes washer standards are defined as net jobs created or 

e:liminated in the general economy as a consequence of: (1) reduced spWidl.ng by end users on 

energy (electricity, gas including LPG1, and oil) and water; (2) reduced spending on new energy 

supply by the utility industry; (3) increased spending on the purchase price of new clothes 

washers; and (4) the associated indirect effects of those three factors throughout the national 

economy. Figure 1 shows the estimated net national employment impacts of nine different clothes 

washer standards scenarios, with efficiency improvements ranging from 5% to 50%. These 

impacts are discussed in greater detail in the Engineering and the National Energy Savings (NES) 

Results sections. Figure 1 shows, for any given year, the change in the number of jobs in the 

economy relative to the case of no new standard. 

160 

Energy Efficiency 

Improvement 

35%, 40% 

140 -+-50% 

--45% 

120 . ,C,·40% 

~35% 

-+-25% 

100 -+-20% 

Ui" -+-15% 

"C -10% c: 

Cll -5% 80 I/I 

:I 

0 

..c: 

!::. 60 I/I 

.c 

0 

.., 40 

20 

-20 

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N N N N N N N N N N N N N N N N N N N N N N N N N N N N 

Year 

F:igure 1 Net National Employment Impacts 

1 LPG = liquid petroleum gas 

1 
To develop these results we used an input/output model of the U.S. economy to estimate the 

effects on different major sectors of the U.S. economy most relevant to buildings and their net 

impact on jobs. The model, ImBuild, was developed by the Office of Building Technology, State 

and Community Programs.2 ImBuild (which stands for Impact of Building Energy Efficiency 

Programs) was created by the Pacific Northwest National Laboratory (PNNL) as a specialpurpose version of the IMPLAN national input-output model. It was developed to estimate the 

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

e:conomic multiplier approaches, ImBuild allows for more complete and automated analysis of the 

economic impacts of energy efficiency investments in buildings. ImBuild is also easier to use than 

existing macroeconomic simulation models. 

ImBuild is written in Visual Basic and Excel 7.0. ImBuild takes user-supplied input and estimates 

employment effects at the national level. It uses a 35-sector model of the national economy to 

model the economic impacts of residential and commercial buildings technologies. It has a userfriendly, menu-driven front end to facilitate user inputs. 

Energy efficiency technology affects the activity level of the U.S. economy through three primary 

mechanisms. First, if the incremental costs of the new technology per installed unit are different 

from those of the conventional technology, changes in the level of purchases will occilr in the 

s1!ctors involved in manufacturing, distribution, and installation for both technologies, changing 

the overall mix of economic activity. Second, depending on how the efficiency investment is 

financed, it may "crowd out" other domestic savings, investments, and consumer spending, 

somewhat reducing overall economic activity. Third, energy expenditures are reduced. On one 

hand, this reduction lowers final demand in the electric and gas utility sectors (and the fuel oil 

production and distribution sector as well), as well as the trade and services sectors that provide 

maintenance, parts, and services for these sectors. On the other hand, it increases net disposable 

income of households and increases general consumer spending in all sectors (including some 

increases in expenditures for electric and gas utility services and retail trade and services). 

IrnBuild addresses these mechanisms by collecting estimates of the initial investments, energy 

savings, and economic activity associated with spending of the savings (increases in final demand 

in personal consumption, business investment, and government spending), and provides overall 

e!;timates of the increase in national output for each input-output sector. Then, 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. ImBuild calculates the total effect 

on employment, including job creation or deletion in the manufacturing sector. 

2

Pacific Northwest National Laboratory (PNNL). 1998. lmBuild: Impact of Building Energy Efficiency 

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

National Laboratory, Richland, Washington. 

2 
Direct employment impacts, those that would occur at clothes washer manufacturing plants, are 

discussed in the Manufacturer Impact Analysis section.3 

Figure 1 shows the cumulative increase/decrease in jobs for each year to the year 2030. The 

greatest number of jobs is created for the standard scenario of a 35% improvement in clothes 

washer efficiency; in this case there would be 142,800 more jobs in 2030 than if there were no 

e:fficiency standard implemented. 

Jobs are created when a clothes washer standard results in operating cost savings that more than 

offset the greater capital required to buy a more efficient clothes washer. Energy and water 

savings (lower operating costs) are based on the difference in energy and water consumption 

between scenarios of a standards case and a base case. 

Figure 1 can be divided into three general sections: 

1) In the first few years of a new standard, the increased costs of buying more efficient clothes 

washer are greater than the initial dollar savings in energy and water. In Figure 1, this is reflected 

as a net decrease in jobs for some of the standard levels. 

2) Once the initial costs are recovered by energy and water savings, the dollars saved in 

expenditures on energy and water are available to buy other goods in the economy, thereby 

increasing jobs. The net national employment curve is steepest for the first 17 years (the 

maximum life of a washer) as the existing clothes washers are replaced by clothes washers that 

have a higher efficiency. 

3) After 17 years, even though the total stock in clothes washers continues to increase with the 

population, the growth in net employment tapers off because at that point all of the washers being 

replaced in the standards case are replacing washers that are already high efficiency (instead of 

replacing a baseline washer with a high efficiency washer). 

3

The direct employment impacts will be based on direct interviews and output from a spreadsheet model 

called GRIM. 

3 
The total impact on jobs is composed of several components: 

- consumer savings in energy and water (Figure 2), 

- increased costs for clothes washers (Figure 3), and 

- effects on the energy supply sector (Figure 4). 

Energy Efficiency 

Improvement 

140+-----i-+-50%1-------------------------::<r'=-'----......-.~I 

-e-45% 

-0"'40% 

120 +-------;~ 35 % 1-----------------~;:.._7::;>'+~'----------!I --25% 

--20% 

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; ~5% 

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0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N N N N N N N N 

Years 

Figure 2 Employment Impacts of Consumer Energy and Water Savings 

Figure 2 shows the impact of reduced consumer spending for energy and water savings on jobs. 

When more consumers save money by using efficient washers, they have more money to spend on 

other sectors of the economy and this results in an increase in jobs. The magnitude of the impact 

increases over time as more old washers are replaced with the new, more efficient washers. 

4 
)( l't )( * )I )( )( 1( ~ )( ~ )( )( ~ )( )( )( ~ * * ~ )( * * )( )( )( 

20% 

Energy 

Efficiency 

-4 Improvement 

25% --5% 

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Years 

Fiigure 3 Employment Impacts of Incremental Clothes Washer Price 

Figure 3 shows the employment impacts due to the increased price of more efficient clothes 

washers. The standards typically cause manufacturers of the regulated products to incur 

additional costs. That additional investment in turn transfers spending from other sectors of the 

ec:onomy into the appliance manufacturing sector. Depending upon the relative mix oflabor and 

capitol in the affected industry compared to the rest of the economy, jobs can be created or 

eliminated. In the case of clothes washers, increased investment in the appliance industry is 

typically expected to eliminate jobs, because appliance manufacturing is more capital intensive 

than average. In addition, appliance manufacturers and related businesses (e.g., suppliers) may 

eliminate some jobs to reduce their costs. Finally, the transfer in consumer spending from other 

items to pay for the increased price of clothes washers is also expected to eliminate jobs. All 

these effects are included in the employment impacts of incremental clothes washer price. 

5 
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Energy Efficiency 

Improvement 

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Years 

F:igure 4 Employment Impacts of Energy Savings on Utilities 

Figure 4 shows the decrease in employment in the energy supply sector due to reductions in 

revenues as consumers achieve energy savings. Revenue loss by utilities is expected to result in 

lower employment by utilities. Limitations to the model prevent consideration of possible job 

losses by water utilities. We assume that there is neither an increase or decrease in water utility 

related employment. 

In summary, the consumer savings from reduced energy and water bills create jobs and represent 

the largest impact of standards on employment. The increased price of clothes washers and 

reduced revenues to utilities eliminate jobs. The net effect is job creation. 

6 
,. 

INPUTS TO NET NATIONAL EMPLOYMENT SPREADSHEET 

The impacts of new clothes washer standards are estimated in the National Energy Savings (NES) 

spreadsheet as operating cost savings (energy and water cost savings) and increased clothes 

washer purchase price. These two impacts (see Figures 5 & 6 below) are output from NES and 

input to the calculation of Net National Employment (lmBuild). 

0 

lt • • • • • • • • • • • • • • • • • • • • • • • • . . .. 25% 

20% 

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Year 

Energy 

Efficiency 

Improvement 

-+-50.% 

--45% 

--tr-40% 

--35% 

-lll-25% 

--20% 

-+-15% 

-10% 

-5% 

F'igure 5 Projected increase in U.S. consumer expenditures to purchase clothes washers 

after standards 

Figure 5 shows the annual increase in national consumer expenditures to pay for more efficient 

clothes washers, for each of the possible standard levels (5-50%). 

7 
Energy Efficiency Improvements 

35%, 40%, 50% 

1000+------r-_._--:--~ ~~1---------------------------~~~ 

--45% 

6000 +------< -""'·-40% ~35% L----------------~~~~!:::: ______ J 

-lli-25% 

-+-20% 

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Year 

l~igure 6 Projected U.S. consumer savings in energy and water bills: energy efficiency 

standards on clothes washers 

0 

"' 0 

N 

Figure 6 shows the national savings in consumer energy and water bills for each possible standard 

level (5-50%). Comparing the savings in Figure 6 to the increased costs in Figure 5, the savings 

exceed the costs after a few years. 

Figures 7, 8 and 9 show the energy savings in quadrillions of BTU (quads) for each of the three 

foel sources; electricity, natural gas, and oil. The data provided is expressed as site energy (that 

i!;, energy provided to the customer). This data is output from the NES (National Energy 

Savings) analysis and input into the ImBuild model which then estimates the effect on jobs in the 

energy supply sector. 

8 
Energy Efficiency 

Improvement 50% 

0.12 -+-50% l--------------------,.,,. .... =:1=!::~::::::!:=!::~:::!-U -----45% 

···o-·40% 

·-*-·35% 

45% 

0.1 -lf-25% 1---------------,,C--7"~-----------------11 

---20% 

-+-15% 

-10% 

35%,40% 

-·"'"r='iP"'"~"''-w-·~fc-··~"'~·=*•"'~*""-><---~=····x 

~ 0.08 

Ill 

-05%1----------:>'-/'~-......,,,,,,,,..~---------------~· 

~ ~ I ~ ~ ~ ~ ~ i ~ i i ~ i i ~ ~ ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ Year 

Figure 7 Projected savings due 1to clothes washer standards: residential 

electricity 

0.14 

0.12 

0.1 

i 

.!!!. 

~ 0.08 

Ill 

c 

§ 0.06 ~ 

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a 

0.04 

0.02 

0 

Energy Efficiency 

Improvement 

....... so% 

-----45% 

--&-40% 

50% 

-1----------1--x·-35% 1-------------*>"'-~-------------------ll --25% 

---20% 

-+-15% 25% 

-+------l-10%1----------.,.ff''---:::;;r<=--------------------ll 

-5% 

20% 

-----·~----- ------------ i:l 

0 

N 

Year 

Figure 8 Projected savings due to clothes washer standards: residential natural 

gas (including LPG) 

9 
;; 

0.008 

Energy Efficiency 50% 

Improvement 

0.007 -+-50% -. -x-==·=-·::::"""'o...-_·_:.~'--'-'*-·-·-_-«_··--·~ __ ··-'--····.:..:-x_H 

-tt-45% 35%,40% 

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-.-25% 

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25% 

~ ~5% 

m 0.004 c 

,g 

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'C 20% ., 0.003 :I 

a 

0.002 

0.001 

~ ~ ~ ~ ~ ~ ~ ~ Year 

Figure 9 Projected savings due to clothes washer standard: residential oil 

10