CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

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

15.2 METHOD ......................................................................................................................... 15­1

15.3 RESULTS ......................................................................................................................... 15­2

REFERENCES .......................................................................................................................... 15­6

LIST OF TABLES

Table 15.3.1 Net National Change in Jobs for IRL by TSL and Scenario ............................... 15­4

Table 15.3.2 Net National Change in Jobs for GSFL by TSL and Scenario ............................ 15­4

LIST OF FIGURES

Figure 15.3.1 Net National Change in Jobs for IRL Trial Standard Levels for

2012­2042 for the Existing Technologies, Shift, Product

Substitution ........................................................................................................ 15­3

Figure 15.3.2 Net National Change in Jobs for GSFL Trial Standard Levels for

2012­2042 for the Existing Technologies, Shift, High Lighting

Expertise Scenario ............................................................................................. 15­3

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CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

15.1 INTRODUCTION

The Department defines net national employment impacts from improved efficacy

standards for incandescent reflector lamps (IRL) and general service fluorescent lamps (GSFL)

as net jobs created or eliminated in the general economy as a consequence of: (1) increased

spending on the purchase and installation of new appliances; (2) reduced spending on electricity;

(3) reduced spending on new investment or capacity by energy companies; (4) changes in

operation and maintenance costs; and (5) the associated indirect effects of the above.

Employment impacts include direct and indirect impacts. Direct employment impacts are

any changes in the number of employees of IRL and GSFL manufacturers, their suppliers, and

related service firms (See Chapter 13 of the TSD). 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 IRL and GSFL

products. This chapter addresses the indirect employment impacts.

15.2 METHOD

The Department based its analysis on an input/output 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

1 model, ImSET (which stands for Impact of Sector Energy Technologies) as a successor to

2 3 ImBuild , a special­purpose version of the IMPLAN national input/output model. ImSET

estimates the employment and income effects of building energy technologies. In comparison

with simple economic multiplier approaches, ImSET allows for more complete and automated

analysis of the economic impacts of energy­efficiency investments in buildings.

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 so changes in the level of spending (e.g., due

to the effects of an efficacy standard) in one sector of the economy will affect flows in other

sectors, which affects the overall level of employment.

ImSET uses a 188­sector 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 estimates of the change

in national output for each input­output 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.

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

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

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maintain energy­efficient appliances. The increased cost of appliances leads to higher

employment in the appliance manufacturing sectors and lower employment in other economic

sectors. Second, commercial firm and residential spending are redirected from utilities toward

firms that supply production inputs. Third, electric utility sector investment funds are released

for use in other sectors of the economy. When consumers 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 in this section refer to impacts on employment for the selected years of the

standards relative to the base case for each product. A total of five trial standard levels (TSLs)

are modeled for each of the two lamp technologies, IRL and GSFL. In addition, for each

technology, the two scenarios that bound the NIA results are evaluated:

• For IRL, DOE evaluated Existing Technologies, Shift, Product Substitution scenario and the

Emerging Technologies, Roll­up, No Product Substitution scenario as the high and low range

energy savings estimates, respectively.

• For GSFL, DOE evaluated the Existing Technologies, Shift, High Lighting Expertise

scenario and the Emerging Technologies, Roll­up, Market Segment Based, Lighting

Expertise scenario as the high and low range energy savings estimates, respectively..

For additional discussion of the formulation of these scenarios, see TSD Chapter 10.

Figure 15.3.1 illustrates the estimated net national employment impacts of the five

different trial standard levels (TSLs) for IRL under the Existing Technologies, Shift, Product

Substitution scenario. A detailed discussion of the TSLs can be found in Chapter 9 of the TSD.

The figure shows, for a given year over the analysis period (2012­2042), the change in the

number of jobs in the economy relative to the number of jobs if there were no change in efficacy

standards. Figure 15.3.2 illustrates the estimated net national employment impacts of the five

different trial standard levels (TSLs) for the GSFL equipment under the Existing Technologies,

Shift, High Lighting Expertise scenario. The indirect employment impacts due to amended IRL

efficacy standards are considerably smaller due to the correspondingly smaller estimates of

energy savings associated with their adoption.

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Figure 15.3.1 Net National Change in Jobs for IRL Trial Standard Levels for 2012­2042

for the Existing Technologies, Shift, Product Substitution

Figure 15.3.2 Net National Change in Jobs for GSFL Trial Standard Levels for 2012­2042

for the Existing Technologies, Shift, High Lighting Expertise Scenario

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1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

Similarly, Table 15.3.1 and Table 15.3.2 show the net national employment impacts of the

amended IRL and GSFL efficacy standards by trial standard level and for the two scenarios that

bound the NIA results.

Table 15.3.1 Net National Change in Jobs for IRL by TSL and Scenario

Jobs (thousands)

2012 2022 2032 2042

Existing, Shift, Product Substitution Scenario

TSL 0.1 0.8 1.1 1.4

TSL 0.7 2.2 2.8 3.5

TSL 1.1 3.6 4.6 5.8

TSL 1.1 4.6 5.8 7.5

TSL 1.2 5.2 6.8 8.2

Emerging, Roll­up, No Product Substitution Scenario

TSL 0.0 0.6 0.6 0.9

TSL 0.6 1.9 2.2 2.9

TSL 1.0 3.4 3.9 5.2

TSL 0.9 4.4 5.1 6.9

TSL 1.0 5.2 6.3 7.8

Table 15.3.2 Net National Change in Jobs for GSFL by TSL and Scenario

Jobs (thousands)

2012 2022 2032 2042

Existing, Shift, High Lighting Expertise Scenario

TSL 1.1 10.7 14.2 15.4

TSL 0.9 10.7 14.1 15.2

TSL 2.3 18.8 22.7 21.6

TSL 7.3 32.0 31.2 27.6

TSL 7.4 34.9 35.5 32.4

Emerging, Roll­up, Market Segment Based Scenario

TSL ­0.2 2.9 4.3 5.2

TSL 0.1 4.0 5.2 5.7

TSL 0.9 8.8 10.3 10.1

TSL 2.4 12.8 13.7 13.3

TSL 2.7 15.8 16.2 15.2

As shown in the above tables, the proposed IRL and GSFL efficacy standards have a

small positive impact on jobs, representing well less than 0.1 percent of total U.S. employment.

The long­term 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.

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

and GSFL efficacy standard are relatively small but positive, as shown in Table 15.3.1 and Table

15.3.2, respectively.

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REFERENCES

1 Roop, J.M., M. J. Scott, and R. W. Schultz. ImSET: Impact of Sector Energy Technologies.

Pacific Northwest National Laboratory. July 2005.

2 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. Report No.

PNNL­11884. Prepared for the U.S. Department of Energy under Contract DE­AC06­76RLO

1830.

3 Minnesota IMPLAN Group, Inc., IMPLAN Professional: User’s Guide, Analysis Guide,

Data Guide, 1997. Stillwater, MN.

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