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CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS 

TABLE OF CONTENTS 

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

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

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

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CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS 

14.1 INTRODUCTION 

The Department of Energy (DOE) intends the employment impact analysis to estimate 

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

of the associated expenditures for purchasing and operating equipment. DOE will conduct this 

analysis as one of the analyses for the notice of proposed rulemaking (NOPR). DOE will 

estimate national impacts on major sectors of the U.S. economy, using publicly available data 

and incorporating different energy price scenarios that it will carry out as part of the analysis for 

the NOPR. DOE will make all methods and documentation available for review. 

The imposition of standards can impact employment both directly and indirectly. Direct 

employment impacts are changes in the number of employees at the plants that produce the 

covered equipment, along with the affiliated distribution and service companies, resulting from 

the imposition of standards. DOE will evaluate direct employment impacts in its manufacturer 

impact analysis, as described in chapter 12. Indirect employment impacts may result from 

expenditures shifting between goods (the substitution effect) and changes in income and overall 

expenditure levels (the income effect) that occur due to the imposition of standards. 

14.2 ASSUMPTIONS 

DOE expects new equipment standards to decrease energy consumption, and therefore to 

reduce expenditures for energy. The savings in energy expenditures may be spent on new 

investment and other items. The standards may increase the purchase price of equipment, 

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

Using an input-output model of the U.S. economy, this analysis seeks to estimate the 

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

A simple model might involve reduced expenditures for energy and reallocation of that money 

toward other sectors in the economy. DOE intends the employment impact analysis to quantify 

the indirect employment impacts of these expenditure changes. It will evaluate direct 

employment impacts in the manufacturer impact analysis step of the process. 

14.3 METHODOLOGY 

 To investigate the combined direct and indirect employment impacts, DOE will use the 

Pacific Northwest National Laboratory (PNNL)’s Impact of Sector Energy Technologies

(ImSET) model.1

 PNNL developed ImSET, a spreadsheet model of the U.S. economy that 

focuses on 188 sectors most relevant to industrial, commercial, and residential building energy 

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use, for DOE’s Office of Energy Efficiency and Renewable Energy. ImSET is a special-purpose 

version of the U.S. Benchmark National Input-Output (I-O) model, which has been designed to 

estimate the national employment and income effects of energy saving technologies that are 

deployed by DOE’s Office of Energy Efficiency and Renewable Energy. In comparison with the 

previous versions of the model used in earlier rulemakings, this version allows for more 

complete and automated analysis of the essential features of energy efficiency investments in 

buildings, industry, transportation, and the electric power sectors. 

The ImSET software includes a computer-based I-O model with structural coefficients to 

characterize economic flows among the 188 sectors. ImSET’s national economic I-O structure is 

based on the 1997 Benchmark U.S. table, specially aggregated to 188 sectors.2 

DOE intends to use the ImSet model to estimate changes in employment, industry output, 

and wage income in the overall U.S. economy resulting from changes in expenditures in the 

various sectors of the economy due to an energy conservation standard. For example, small 

electric motor standards may reduce energy expenditures and increase equipment prices in 

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

some near-term reduction in commercial, industrial and energy sector employment. At the same 

time, over the longer-term these equipment standards may increase commercial and industrial 

sector investment, and increase employment in other sectors of the economy. DOE designed the 

employment impact analysis to estimate the year-to-year net national employment effect of these 

different expenditure flows. 

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REFERENCES 

1

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

2005. Pacific Northwest National Laboratory, Richland, WA. PNNL- 15273. 

2

 Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and Jiemin Guo. “Benchmark 

Input-Output Accounts of the U. S. Economy, 1997,” Survey of Current Business, December 

2002. pp. 19-117. 

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