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CHAPTER 14. NET NATIONAL EMPLOYMENT IMPACTS

TABLE OF CONTENTS

14.1 INTRODUCTION .................................................... 14-1

14.2 ASSUMPTIONS ..................................................... 14-1

14.3 METHODOLOGY .................................................... 14-1

14.4 RESULTS .......................................................... 14-2

14.4.1 Employment Impacts of Transformer Standards ....................... 14-2

LIST OF TABLES

Table 14.4.1 Net National Change in Jobs: Liquid-Immersed Transformers ........... 14-4

Table 14.4.2 Net National Change in Jobs: Dry-Type, Medium-Voltage Transformers . . 14-4

LIST OF FIGURES

Figure 14.4.1 Employment Impacts: Liquid-Immersed Transformers ................. 14-3

Figure 14.4.2 Employment Impacts: Dry-Type, Medium-Voltage Transformers ......... 14-3
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CHAPTER 14. NET NATIONAL EMPLOYMENT IMPACTS

14.1 INTRODUCTION

The Department of Energy (DOE) conducted an employment impact analysis for the

notice of proposed rulemaking (NOPR). It designed the employment impact analysis to estimate

indirect national job creation or elimination resulting from possible standards, due to reallocation

of the associated commercial expenditures for purchasing and operating distribution

transformers. The Department estimated national impacts on major sectors of the U.S. economy,

using publicly available data and incorporating different energy price scenarios. 

The employment impact analysis did not evaluate direct employment impacts at

manufacturers’ facilities; DOE considered these impacts in the manufacturer impact analysis (see

Chapter 12 of this technical support document). 

14.2 ASSUMPTIONS

If promulgated, the Department expects distribution transformer energy-efficiency

standards to decrease energy consumption, and therefore to reduce energy expenditures. The

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

remain “saved”). The standards may increase the purchase price of distribution transformers,

including the retail price plus sales tax, and increase installation costs. 

Using an input/output econometric model of the U.S. economy, this analysis estimated

The year-to-year effect of these expenditure impacts on net economic output and employment. 

The Department 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. 

14.3 METHODOLOGY

The Pacific Northwest National Laboratory developed a spreadsheet model for DOE of

the U.S. economy (IMBUILD II), focusing on the sectors of the economy most relevant to

industrial, commercial, and residential building energy use.1 IMBUILD II was originally

developed as a special-purpose version of the Impact Analysis for Planning (IMPLAN) national

input-output model to specifically estimate the employment and income effects of energyefficiency technologies.2

 IMPLAN is used by more than 1500 clients at all levels of the

government, in academia, and in the private sector (http://www.implan.com/references.html).

IMBUILD II includes structural coefficients to characterize economic flows among key sectors of

the economy and track the inter-industry employment impacts resulting from energy-efficiency

standards. 
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Efficiency standards are represented in IMBUILD II by a combination of capital

investments and energy savings. These capital investment and energy savings divert spending

away from some business sectors and toward others. Accordingly, IMBUILD II measures the

economic effect of a standard as (1) the expansion enjoyed by businesses that receive diverted

funds, minus (2) the contraction suffered by businesses that lose diverted funds.

IMBUILD II includes a series of input tables that quantify the size of the capital

investments and energy savings resulting from energy-efficiency standards. These tables also

designate industrial sectors that manufacture efficient products (e.g., distribution transformers)

and other sectors (including utilities) that lose sales as a result of efficiency standards. 

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.,

resulting from an efficiency standard) in one sector of the economy will affect flows in other

sectors, which affects the overall level of employment. For example, distribution transformer

standards may reduce energy expenditures and increase equipment prices in the utility sector and

the commercial and industrial sectors. These expenditure changes are likely to reduce

employment in these sectors. At the same time, transformer standards may increase commercial

and industrial sector investment, and thus increase employment in other sectors of the economy. 

The Department designed the employment impact analysis to estimate the year-to-year net

employment effect of these different expenditure flows.

IMBUILD calculates the total effect of standards on employment, including job creation

or deletion in the manufacturing, commercial, industrial, and retail sectors of the economy, not

including transformer manufacturers. Direct employment impacts, i.e., those that would occur at

transformer manufacturing plants, are considered in the manufacturer impact analysis (Chapter

12). 

14.4 RESULTS

14.4.1 Employment Impacts of Transformer Standards

Energy-efficiency standards for transformers are expected to reduce electricity bills for

commercial and industrial customers, while increasing the costs of transformers. This shift in

spending has beneficial implications for net national employment. The electric utility sector is

more capital-intensive and less labor-intensive than other sectors. A shift in spending away from

payments of electricity bills into other sectors is expected to increase employment. A previous

study concluded: “By shifting economic activity away from energy supply and by saving

consumers and businesses money that will be re-spent throughout the economy, energyefficiency improvements will result in a net increase in jobs and personal income.”3

 Energy

savings from national energy-efficiency standards for transformers are diffuse, spread among all
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Figure 14.4.1 Employment Impacts: Liquid-Immersed Transformers

commercial and industrial customers, and small relative to total national expenditures, so

employment impacts are small relative to total national employment.

Figures 14.4.1 and 14.4.2 show the estimated net national employment impacts of the six

different trial standard levels (TSLs) for the two distribution transformer superclasses: liquidimmersed and dry-type, medium-voltage transformers, respectively. These trial standard levels

are presented in greater detail in the descriptions of the analyses of shipments (Chapter 9) and

national energy savings and net present value (Chapter 10). The figures show, for any given

year, the change in the number of jobs in the economy relative to the number of jobs if there were

no change in standards (and thus no resulting change in spending and cash flow patterns

throughout the economy). Similarly, Tables 14.4.1 and 14.4.2 show the net national employment

impact of the transformer standards, by standard level, for specified years.
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Figure 14.4.2 Employment Impacts: Dry-Type, Medium-Voltage

Transformers

Table 14.4.1 Net National Change in Jobs: Liquid-Immersed Transformers 

Trial Standard

Level

Net National Change in Jobs (in thousands)

2015 2020 2030 2038

1 0.9 1.6 3.2 4.7

2 1.1 2.1 4.3 6.4

3 1.2 2.4 5.1 7.7

4 3.0 2.6 5.8 8.7

5 1.9 4.8 11.7 18.2

6 -0.3 3.3 11.6 19.4

Table 14.4.2 Net National Change in Jobs: Dry-Type, Medium-Voltage Transformers 

Trial Standard

Level

Net National Change in Jobs (in thousands)

2015 2020 2030 2038

1 0.1 0.1 0.2 0.3

2 0.1 0.2 0.3 0.5
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3 0.1 0.2 0.5 0.7

4 0.2 0.3 0.7 1.0

5 0.2 0.4 0.9 1.4

6 0.2 0.4 0.9 1.4

As shown in Figures 14.4.1 and 14.4.2, distribution transformer standards for the two

transformer superclasses have an initial negative impact on jobs, caused by the shift in spending

toward transformer manufacturers. In later years, the standards have a positive impact on jobs,

due to the shift in spending away from the electricity sector, with its low employment intensity

(jobs per dollar expenditure), and toward other sectors of the economy, with higher employment

intensity. The liquid-immersed transformer standard involves relatively high investment

expenditures and leads to relatively larger employment impacts, compared to the dry-type,

medium-voltage transformer standard.
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REFERENCES

1. Scott, M. J., J. M. Roop, and R. W. Schultz. ImBuild II: Impact of Technologies on

Energy Efficiency Programs. June, 2002. Pacific Northwest National Laboratory.

Richland, WA. Report No. PNNL-13926. Prepared for the U.S. Department of Energy

under Contract DE-AC06-76RLO1830.

<http://www.pnl.gov/main/publications/external/technical_reports/PNNL-13926.pdf>

2. Minnesota IMPLAN Group Inc. IMPLAN Professional: User's Guide, Analysis Guide,

Data Guide. 1997. Stillwater, MN. 

3. Massachusetts Energy Efficiency Council. The Energy Efficiency Industry and the

Massachusetts Economy. December, 1992.