CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

**15.1 ASSUMPTIONS............................................................................................................... 15­1** 

**15.2 METHODOLOGY** 

**........................................................................................................... 15­1** 

**15.3 RESULTS** 

**......................................................................................................................... 15­2** 

LIST OF TABLES

**Table 15.3.1**  **Net National**  **Change in**  **Jobs for**  **Combined Standard**  **PTACs and** 

**PTHPs by**  **TSL**

**................................................................................................... 15­5** 

**Table 15.3.2**  **Net National**  **Change in**  **Jobs for**  **Combined Non­Standard**  **PTACs**

**and PTHPs**  **by TSL** 

**............................................................................................ 15­5** 

LIST OF FIGURES

**Figure 15.3.1**  **Net National**  **Change in**  **Jobs for**  **Combined PTACs**  **and PTHPs**  **by**

**Trial Standard**  **Levels, 2012­2042......................................................................**  **15­3**

**Figure 15.3.2**  **Net National**  **Change in**  **Jobs for**  **Combined PTACs**  **and PTHPs**  **by**

**Trial Standard**  **Levels, 2012­2042......................................................................**  **15­4**

**15­i**CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

**Employment impact**  **is one**  **of the**  **factors that**  **the U.S.**  **Department of**  **Energy (DOE)** 

**considers in**  **selecting a**  **standard for**  **packaged terminal**  **air conditioners**  **(PTACs) and**  **packaged**

**terminal heat**  **pumps (PTHPs).**  **Employment impacts**  **include direct**  **and indirect**  **impacts. Direct** 

**employment impacts**  **are any**  **changes in**  **the number**  **of employees**  **for PTAC**  **and PTHP** 

**manufacturers, their**  **suppliers, and**  **related service**  **firms. Indirect**  **impacts are**  **those changes**  **of**

**employment in**  **the larger**  **economy that**  **occur due**  **to the**  **shift in**  **expenditures and**  **capital**

**investment that**  **is caused**  **by the**  **purchase and**  **operation of**  **more efficient**  **PTAC and**  **PTHP**

**equipment. The**  **manufacturer impact**  **analysis in**  **this rulemaking**  **addresses only**  **the employment** 

**impacts on**  **manufacturers of**  **PTACs and**  **PTHPs, i.e.,**  **the direct**  **employment impacts**  **(See**

**Chapter 13**  **of the**  **TSD); this**  **section describes**  **other, primarily**  **indirect, employment**  **impacts.**

15.1 ASSUMPTIONS

**If promulgated,**  **DOE expects**  **PTAC and**  **PTHPs’ amended**  **energy conservation**  **standards**

**to decrease**  **the national**  **energy consumption,**  **and therefore,**  **reduce energy**  **expenditures. The** 

**savings in**  **energy expenditures**  **may be**  **used on**  **new investment**  **or not**  **at all**  **(i.e., they**  **may**

**remain “saved”).**  **The amended**  **energy conservation**  **standards may**  **increase the**  **purchase price** 

**(i.e., equipment**  **price plus**  **sales tax)**  **and installation**  **costs of**  **PTACs and**  **PTHPs.**

**Using an**  **econometric model**  **of the**  **U.S. economy,**  **this analysis**  **estimated the**  **year­to**

**year effect**  **of these**  **expenditure impacts**  **on net**  **economic output**  **and employment.**  **DOE**

**intended this**  **analysis to**  **quantify the**  **indirect employment**  **impacts of**  **reduced expenditures**  **for**

**energy and**  **reallocation of**  **that money**  **toward other**  **sectors of**  **the economy.** 

15.2 METHODOLOGY

**DOE defines**  **the net**  **national employment**  **impacts resulting**  **from proposed**  **amended**

**energy conservation**  **standards for**  **PTACs and**  **PTHPs as**  **the net**  **national change**  **in jobs**  **in the** 

**general economy.**  **The key**  **factors affecting**  **the outcome**  **of net**  **change in**  **jobs are:**  **(1) increased** 

**spending on**  **the purchase**  **and installation**  **of PTAC**  **and PTHP**  **equipment meeting**  **the amended** 

**standards, (2)**  **reduced customer**  **spending on**  **electricity, (3)**  **reduced spending**  **on new**  **investment**

**or capacity**  **by energy**  **companies, and**  **(4) the**  **associated indirect**  **effects of**  **the above.** 

**DOE based**  **its analysis**  **on the**  **Impact of**  **Sector Energy**  **Technologies (ImSET)**  **model**

**developed by**  **Pacific Northwest**  **National Laboratory**  **for DOE’s**  **Office of**  **Energy Efficiency**  **and**

**Renewable Energy.**  **1 ImSET**  **is a**  **personal­computer­based, economic­analysis**  **model that** 

**estimates the**  **effects of**  **standards on**  **major sectors**  **of the**  **U.S. economy**  **related to**  **buildings and** 

**the net**  **impact of**  **standards on**  **jobs. ImSET’s**  **input/output structure**  **is based**  **on the**  **1997**

**Benchmark U.S.**  **table aggregated**  **to 188**  **sectors to**  **estimate the**  **employment and**  **income effects** 

**of building**  **energy technologies.**  **2 In**  **comparison with**  **simple economic**  **multiplier approaches,** 

**ImSET allows**  **for more**  **complete and**  **automated analysis**  **of the**  **economic impacts**  **of energy** 

**efficiency investments**  **in buildings.** 

**15­1 In**  **an input/output**  **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. Different** 

**sectors have**  **different levels**  **of labor**  **intensity and**  **changes in**  **the level**  **of spending**  **(e.g., due**  **to**

**the effects**  **of an**  **amended energy**  **conservation standard)**  **in one**  **sector of**  **the economy**  **will affect** 

**spending in**  **other sectors,**  **which in**  **turn will**  **affect the**  **overall level**  **of employment.** 

**ImSET uses**  **a 188­sector**  **model 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 amended** 

**standards (e.g.,**  **changes in**  **final demand**  **in personal**  **consumption, business**  **investment and** 

**spending, and**  **government spending).**  **It provides**  **overall estimates**  **of the**  **change in**  **national**

**output for**  **each input­output**  **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.** 

**ImSET calculates**  **the total**  **effect of**  **standards on**  **employment, including**  **job creation**  **or**

**deletion in**  **the manufacturing**  **sector. As**  **described above,**  **DOE analyzed**  **the direct**  **employment**

**impacts, i.e.,**  **those that**  **would occur**  **at the**  **manufacturing plants**  **of PTAC**  **and PTHP**  **equipment,**

**in the**  **manufacturer impact**  **analysis (Chapter**  **13).**

**Energy­efficiency technology**  **primarily affects**  **the U.S.**  **economy along**  **three spending** 

**pathways. First,**  **general investment**  **funds are**  **diverted to**  **sectors that**  **manufacture, install,**  **and**

**maintain energy­efficient**  **technologies. The**  **increased cost**  **of technology**  **leads to**  **higher**

**employment in**  **the air­conditioner**  **manufacturing sector**  **including PTACs**  **and PTHPs**  **and lower** 

**employment in**  **other economic**  **sectors. Second,**  **commercial firm**  **spending is**  **redirected from** 

**utilities toward**  **firms that**  **supply commercial**  **production inputs.**  **Third, electric**  **utility sector** 

**investment funds**  **are released**  **for use**  **in other**  **sectors of**  **the economy.**  **When customers**  **use less** 

**energy, electric**  **utilities experience**  **relative reductions**  **in demand**  **which leads**  **to reductions**  **in**

**utility sector**  **investment and**  **employment.**

15.3 RESULTS

**The results**  **show the**  **total effects**  **of amended**  **energy conservation**  **standards on** 

**employment for**  **the selected**  **years. The**  **analysis was**  **based on**  **the assumption**  **that PTAC**  **and**

**PTHP equipment**  **will phaseout**  **the current**  **refrigerant R­22**  **in 2010**  **and use**  **a substitute** 

**refrigerant R­410A**  **before the**  **effective date**  **of this**  **rulemaking.**

**Figure 15.3.1**  **and Figure**  **15.3.2 show**  **the estimated**  **net national**  **employment impacts**  **of**

**the seven**  **different trial**  **standard levels**  **(TSLs) for**  **the standard**  **PTAC and**  **PTHP equipment**  **and**

**Non­Standard PTAC**  **and PTHP**  **equipment, respectively.**  **A detailed**  **discussion of**  **the TSLs**  **can**

**be found**  **in Chapter**  **9 of**  **the TSD).**  **The figure**  **shows, for**  **a given**  **year over**  **the period**  **of**

**analysis (2012­2042),**  **the change**  **in the**  **number of**  **jobs in**  **the economy**  **relative to**  **the number**  **of**

**jobs if**  **there were**  **no change**  **in standards**  **and hence,**  **no resulting**  **change in**  **spending and**  **cash**

**flow patterns**  **throughout the**  **economy.**

**15­2 0** **20 40** **60 80** **100 120** **140 160** **180 200**  2012 2017 2022 2027 2032 2037 2042

Jobs**TSL 1** **TSL 2** **TSL 3** **TSL A** **TSL 4** **TSL 5** **TSL 6** Figure15.3.1NetNationalChangeinJobsforCombinedPTACsandPTHPsbyTrialStandardLevels,2012­2042**15­3 0** **5 10** **15 20** **25 30**  2012 2017 2022 2027 2032 2037 2042

Jobs**TSL 1** **TSL 2** **TSL 3** **TSL 4** **TSL 5** Figure15.3.2NetNationalChangeinJobsforCombinedPTACsandPTHPsbyTrialStandardLevels,2012­2042**15­4 Similarly,**  **Table 15.3.1**  **and Table**  **15.3.2 show**  **the net**  **national employment**  **impacts of** 

**the amended**  **PTAC and**  **PTHP energy**  **conservation standards**  **by trial**  **standard level**  **and**

**specified years**  **for the**  **entire standard**  **and non­standard**  **PTAC and**  **PTHP markets,**  **respectively.**

Table 15.3.1 Net National Change in Jobs for Combined Standard PTACs and PTHPs by

TSL

Trial Standard Net National Change in Jobs (Number of Jobs)

Level 2012 2022 2032 2042

**TSL 1**  **0 19**  **33 41** 

**TSL 2**  **0 33**  **57 70** 

**TSL 3**  **0 42**  **72 87** 

**TSL A**  **0 43**  **75 91** 

**TSL 4**  **0 45**  **79 96** 

**TSL 5**  **0 66**  **115 138** 

**TSL 6**  **0 92**  **159 190** 

Table 15.3.2 Net National Change in Jobs for Combined Non­Standard PTACs and

PTHPs by TSL

Trial Standard Net National Change in Jobs (Number of Jobs)

Level 2012 2022 2032 2042

**TSL 1**  **0 4**  **8 8** 

**TSL 2**  **0 5**  **9 9** 

**TSL 3**  **0 6**  **12 12** 

**TSL 4**  **0 8**  **14 14** 

**TSL 5**  **0 11**  **20 20** 

**As shown**  **in the**  **Figure 15.3.1,**  **Figure 15.3.2,**  **Table 15.3.1**  **and Table**  **15.3.2, the** 

**proposed PTAC**  **and PTHP**  **standards have**  **virtually no**  **initial impact**  **on jobs**  **and have**  **a small** 

**positive impact**  **on jobs**  **in later**  **years. This**  **is explained**  **by the**  **fact that**  **the required**  **initial**

**investment in**  **the standard­compliant**  **equipment costs**  **a few**  **jobs because**  **the investment**  **is**

**capital­intensive relative**  **to other**  **spending in**  **the economy**  **that would**  **be displaced**  **to pay**  **for the** 

**investment. However,**  **in the**  **long term,**  **the benefit**  **to the**  **economy of**  **the energy**  **savings from** 

**the installed**  **equipment more**  **than makes**  **up for**  **the initial**  **investment and**  **the net**  **effect on** 

**employment is**  **positive. The**  **long term**  **positive and**  **increasing impact**  **occurs because**  **the energy** 

**savings in**  **future years**  **are obtained**  **from both**  **current and**  **previous efficiency**  **investments**

**reflected in**  **the installed**  **stock of**  **efficient equipment,**  **while investment**  **costs for**  **the equipment** 

**occur only**  **once.**

**In conclusion,**  **DOE estimates**  **that net**  **indirect employment**  **impacts from**  **a proposed** 

**PTAC and**  **PTHP standards**  **are positive.** 

**15­5**REFERENCES

**1. Pacific**  **Northwest National**  **Laboratory,** ImSET: Impact of Sector Energy Technologies. **2005.**

**Richland, WA.**  **Prepared for**  **the U.S.**  **Department of**  **Energy under**  **Contract DE­AC05­** 

**76RLO1830.**

**2. Lawson,**  **Ann M.,**  **Kurt S.**  **Bersani, Mahnaz**  **Fahim­Nader, and**  **Jiemin Guo.**  **2002.**

**“Benchmark Input­Output**  **Accounts of**  **the U.**  **S. Economy,**  **1997,”** Survey of Current

Business

**, December,**  **pp. 19­117.** 

**15­6**