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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 netjobs created or e:liminated inthe 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 onnew energy supply by the utility industry; (3) increased spending onthe purchase price ofnew clothes washers; and (4) the associated indirect effects ofthose three factors throughout the national economy. Figure 1 shows the estimated net national employment impacts ofnine 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 ofno new standard.

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### F:igure 1 Net National Employment Impacts

1 LPG = liquid petroleum gas
1To develop these results we used an input/output model ofthe U.S. economy to estimate the effects on different major sectors ofthe U.S. economy most relevant to buildings and their net impact onjobs. The model, ImBuild, was developed by the Office ofBuilding Technology, State and Community Programs.2 ImBuild (which stands for Impact ofBuilding Energy Efficiency Programs) was created by the Pacific Northwest National Laboratory (PNNL) as a specialpurpose version ofthe IMPLAN national input-output model. 

### It was developed to estimate the employment and income effects ofbuilding energy technologies. In comparison with simple e:conomic multiplier approaches, ImBuild allows for more complete and automated analysis ofthe economic impacts ofenergy efficiency investments in buildings. ImBuild is also easierto use than existing macroeconomic simulation models.

ImBuild is written in Visual Basic and Excel 7.0. ImBuildtakes user-supplied input and estimates employment effects at the national level. Ituses a 35-sectormodel ofthe national economy to model the economic impacts ofresidential and commercial buildings technologies. Ithas a userfriendly, menu-driven front endto facilitate user inputs.
Energy efficiency technology affects the activity level ofthe U.S. economy through three primary mechanisms. First, ifthe incremental costs ofthe newtechnology per installed unit are different from those ofthe conventional technology, changes in the level ofpurchases will occilr inthe s1!ctors involved in manufacturing, distribution, and installation for both technologies, changing the overall mix ofeconomic activity. Second, depending onhowthe efficiency investment is financed, it may "crowd out" other domestic savings, investments, and consumer spending, somewhatreducing overall economic activity. Third, energy expenditures are reduced. On one hand, this reduction lowers final demand inthe electric and gas utility sectors (and the fuel oil production and distribution sector as well), as well as the trade and services sectors thatprovide maintenance, parts, and services for these sectors. Onthe other hand, it increases net disposable income ofhouseholds 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 ofthe initial investments, energy savings, and economic activity associated with spending ofthe savings (increases infinal demand in personal consumption, business investment, and government spending), andprovides overall e!;timates ofthe increase in national output for each input-output sector. Then, the model applies estimates ofemployment and wage income per dollar ofeconomic output for each sector and calculates impacts onnational employment and wage income. ImBuild calculates the total effect
on employment, includingjob creation or deletion inthe manufacturing sector.

2Pacific Northwest National Laboratory (PNNL). 1998. lmBuild: Impact of BuildingEnergy Efficiency Programs. Prepared for the U.S. Department ofEnergy under Contract DE-AC06-76RLO 1830. Pacific Northwest National Laboratory, Richland, Washington.


### 2Direct 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 injobsfor each year to the year 2030. The greatest number of jobs is created for the standard scenario ofa 35% improvement in clothes washer efficiency; in this case there would be 142,800 morejobs in 2030 than ifthere 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 ofa standards case and a base case. Figure 1 can be divided into three general sections:
1) In the first few years ofa new standard, the increased costs ofbuying 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 injobs for some ofthe 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 increasingjobs. The net national employment curve is steepest for the first 17 years (the maximum life ofa 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 withthe population, the growth in net employment tapers offbecause at that point all ofthe washers being replaced inthe standards case are replacing washers that are already high efficiency (instead of replacing a baseline washer with a high efficiency washer).

3The direct employment impacts will be based on direct interviews and output from a spreadsheet model called GRIM.


### 3The total impact onjobs is composed ofseveral 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).

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### Figure 2 Employment Impacts ofConsumer Energy and Water Savings

Figure 2 shows the impact ofreduced consumer spending for energy and water savings onjobs. When more consumers save money by using efficient washers, they have more money to spend on other sectors ofthe economy and this results in an increase injobs. The magnitude ofthe impact increases overtime as more old washers are replaced withthe new, more efficientwashers.

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### Fiigure 3 EmploymentImpacts ofIncremental Clothes Washer Price



### Figure 3 shows the employment impacts due to the increased price ofmore efficient clothes washers. The standards typically cause manufacturers ofthe regulated products to incur additional costs. That additional investment in turn 

### transfers spending from other sectors ofthe ec:onomy into the appliance manufacturing sector. Depending upon the relative mix oflabor and capitol in the affected industry compared to the rest ofthe economy,jobs canbe created or eliminated. In the case ofclothes washers, increased investment in the appliance industry is typically expected to eliminatejobs, because appliance manufacturing is more capital intensive than average. In addition, appliance manufacturers and related businesses (e.g., suppliers) may eliminate somejobsto reduce their costs. Finally, the transfer in consumer spending from other items to pay for the increased price ofclothes washers is also expected to eliminatejobs. All these effects are included in the employment impacts ofincremental clothes washer price.

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### F:igure 4 Employment Impacts ofEnergy 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 employmentby utilities. Limitations to the model prevent consideration ofpossiblejob losses by water utilities. We assume thatthere is neither an increase ordecrease in water utility related employment.

In summary, the consumer savings from reduced energy and waterbills createjobs and represent the largest impact ofstandards on employment. The increased price ofclothes washers and reduced revenues to utilities eliminatejobs. The net effect isjobcreation.

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INPUTS TO NETNATIONAL EMPLOYMENT SPREADSHEET
The impacts ofnewclothes washer standards are estimated inthe National Energy Savings (NES) spreadsheet as operating cost savings (energy and water cost savings) and increased clothes washerpurchase price. These two impacts (see Figures 5 & 6 below) are outputfrom NES and input to the calculation ofNetNational Employment (lmBuild).

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### F'igure 5 Projected increase in U.S. 

### consumer expenditures to purchase clothes washers after standards
Figure 5 shows the annual increase in national consumerexpenditures to pay for more efficient clothes washers, for each ofthe possible standard levels (5-50%).

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### 6 Projected U.S. consumer savings in energy and water bills: energy efficiency standards on clothes washers 0 

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Figure 6 shows the national savings in consumer energy and water bills for eachpossible 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 showthe energy savings in quadrillions ofBTU (quads) for each ofthe three foel sources; electricity, natural gas, and oil. The dataprovided 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 onjobs in the energy supply sector.



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