14 -i CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

14.1 INTRODUCTION ............................................................................................................ 14-1 14.2 ASSUMPTIONS ............................................................................................................... 14-1 14.3 METHO DOLOGY ........................................................................................................... 14-1 REFERENCES .......................................................................................................................... 14-314 -1 CHAPTER 1 4. EMPLOYMENT IMPACT ANALYSIS

14.1 INTRODUCTION

The employme nt imp ac t analy sis is intended to est im ate nation a l job cr eation or job

e limin ation re sulting fr o m p roposed stand ar ds due to rea llo cation of a sso ciated commerci al expenditu re s for pu rc ha sing and op erati ng high

- intensity discharge lamps . The U.S. Dep artm ent of En e rg y (D OE) will conduct this analy sis a s p art of the notice of proposed rulemaking ( NO PR ).

DOE will e s tim ate the effects of st and ar ds on e mplo yment for equipment man uf ac tu rers,

re levant service industries, ene rg y suppli er s, and the ec onomy in gen era l. Both indi rec t and di rec t employme nt imp ac ts are estimated

. Di rec t employme nt effects wou ld re sult if ene rg y

cons ervation standards led to a change in the number of employee s at m anu fac tu ring plants and

re lated supply and service firms. Di rec t imp ac t est im ate s ar e addre ss ed in the manufac tu rer imp ac t analy sis (chapter 13 of the interimt ec hnical support document (TSD)). Indirec t employme nt imp ac ts a ff ec t the nation a l ec onomy in area s other th an the regulat ed manu fac tu ring

sec to r. Indi rec t imp ac ts m ay re sult fr om both expenditu re s shi f ting amo n g goods (substitution effec t) and change s in in come th at l ead to an a djustm ent in ov era ll expenditur e l eve ls ( in come

e ff ect). D OE d ef in es indirec t e mp loyme nt imp ac ts from energy cons er vation st and ar ds a s n e t jobs eli min ated or cr eated in the gen era l ec onomy as a re sult of in crea s ed sp ending driven by the in crea sed price s for regulated equipment and re duced sp ending on ene rg y.

14.2 AS SUMPTIONS

DOE expects new ene rg y cons ervation stand ar ds to increase the total installed cost of equipment (which includes manufacturer sales price, sales taxes, distribution channel markups, and installation costs). DOE also exp ec ts ene rg y cons er vation stand ar ds to d e crea se ene rg y consumption and, th eref ore, to re duce ene rg y expenditu re s. The sav in gs in ene rg y expenditu re s may be sp ent on ne w inv e stm ent or not at a ll ( i. e. , th ey may remain “saved”). The st and ar ds may in c rea se the pu rc ha se price of lamps and related equipment , including the retail p rice plus sale s tax, and in cr ea se insta ll ation c osts.
Using an input-output (I- O) model of the U. S. ec onomy, this analy sis will seek to estimate the effects on different sectors and the net effect on jobs. DOE will estimate national employment effects on major sectors of the U.S. economy in the NOPR using public and commercially available data sources and software. DOE will make all methods and documentation available for review.

14.3 METHODOLOGY

DOE will b ase its analy sis on an I- O mod e l of the U.S. ec onomy th at e stim ates the eff ec ts of st and ar ds on major sec to rs of the ec onomy re lated to building s and the ne t i mp ac t of st and ar ds on jobs. The P ac if ic No rthwe st N ation al Laborato ry developed the model, ImSET 3.1.1 1 (Imp ac t of Se ctor En e rg y T ec hnologie s), to e stim ate the employment and income ef fec ts of building

ene rg y t ec hnologies. Compare d with simple ec onomic multipli er appro ac he s, ImS ET a llows for14 -2 mo re comple te and automated analy sis of the ec onomic imp acts of ene rg y eff icienc y inv e stm ents in building s.

In an I- O model, the level of employment in an economy is d et ermin ed by t he

re lationships of di ff e re nt s ec to rs of the ec onomy and the sp ending f lows among th e m. Because di ffere nt s ec to r s h ave di f fere nt levels of labor intensity, changes in the level of sp ending ( e.g. , due to the ef f

ec ts of an efficiency st and ar d) in one s ec tor of the ec onomy wi ll affec t flows in other s ec to r s, wh ich affec ts the ov era ll l evel of employment.
The ImSET model includes structure coefficients to characterize economic flows among the multiple sectors. ImSET’s national economic I -O structure is based on the 1997 Benchmark U.S. table, 2 which is aggregated to 187 sectors. The time scale of the model is 50 years.

ImS ET us es a 187-sector model of the nation al economy to p re dic t the ec onomic eff ec ts of re sid entia l and c omm e rc ia l buildin g s t echnologie s. ImS ET coll ec ts e stim ates of initi al inve stm ents, ene rg y savings, and ec onomic ac tivitya ss ociated with spending the saving s

re sulting from stand ar ds ( e.g. , changes in f in a l d emand in p er sona l consumption, busine ss inve stm ent and spending, and gov ernment spending). I t provides ove ra ll est im ates of the chan ge in nation al output for ea ch I- O s ec to r. The model applie s e stim ates of e mp loyment and wa ge in come per dollar of ec onomic output for eac h sector and calculate s imp acts on nation a l employment and wage incom e.

The following is an example of how the employme nt imp ac t analy sis m ight track effects resulting fr om a st andar d for high

- intensity discharge lamps . Depending on the de si gn options consid ere d, one possible outcome is th at the st and ar ds for th e se lamps would re duce ener gy expenditu re s and in crea se equipment pri ce s in the comm erc ia l s ec to r . Th e se expenditure change s may re du ce c omm erc ia l and ene rg y s ec tor employment. At the same tim e, the st and ar d may in c rea s e inv e stm ent in the comm erc ia l s ec tor and employment in other s ec to rs. D OEde si gned the employme nt imp ac t analys is to e stim ate the ann ua l n e t n ation a l employme nt imp ac t of th e se types of expenditure flo ws.14 -3 REFERENCES

1. Scott, M. J., J. M. R oop, O. V. Livingston, R. W. Schultz, and P. J. Balducci. I mSET 3.1: I

mpa c t of S ec tor Ene rgy T ec hnologies. 2009. P ac if ic No rthwe st Nation al Labo rato ry : Richland, WA. PNNL-18412. < www.pnl.gov/main/publications/external/ technical_reports/PNNL -18412.pdf >

2

. Lawson, A. M., K. S. Bersandi, M. Fahim-Nader, and J. Guo. Benchmark Input-Output Acc ounts of the United States, 1997. Survey of Current Business . 2002. 82 (December): pp. 19-109.