CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 ASSUMPTIONS

.............................................................................................................. . 15-2

15.2 METHODOLOGY

........................................................................................................... 15 -2

15.3 RESULTS

.................................................................................................................. ....... 15-3

REFERENCES

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LIST OF TABLES

Table 15.3.1 Net National Change in Jobs fo r Class A Beverage Vending Machines

........... 15-3 Table 15.3.2 Net National Change in Jobs fo r Class B Beverage Vending Machines

........... 15-4

15-i BVM_FINAL_FR_TSD_Chapter15_08-14-09.docCHAPTER 15. NET NATIONAL EMPL OYMENT IMPACT ANALYSIS

Employment impact is one of the factors that the U.S. Department of Energy (DOE) considers in selecting a standard for refriger ated beverage vending machines. Employment impacts include direct and indir ect impacts. Direct employment impacts are any changes in the number of employees for beverage vending mach ine 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 ca used by the purchase and operation of more efficient be verage vending machine equipm ent. The manufacturer impact analysis in this rulemaking addresses onl y the employment impacts on manufacturers of beverage vending machines ( i.e. , the direct employment impa cts). Chapter 13, Manufacturer Impact Analysis, of the technical support docum ent (TSD) describes othe r manufacturer impacts, primarily indirect employment impacts.

15.1 ASSUMPTIONS

DOE expects the refrigerated beverage vendi ng machines energy conservation standards to decrease the national energy consumption a nd therefore reduce ener gy expenditures. The savings in energy expenditures may be us ed on new investment or not at all ( i.e. , they may remain “saved”). The energy conservation st andards may increase the purchase price ( i.e.
, equipment price plus sales tax) and installation costs of beverage vending machines.

Using an input-output model of the U.S. ec onomy, this analysis estimated the year-to

year effect of these expenditure impacts on ne t economic output and employment. This analysis quantifies the indirect employme nt 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 energy conservation standards for beverage vending machines as the net national change in jobs in the general economy. The key factors affecting the outcome of ne t change in jobs are: (1) increased spending on the purchase and installation of beverage vending machine equipment meeting the standards; (2) reduced customer spending on electricity; (3) reduced spending on new investment or capacity by energy companies; and (4) the as sociated indirect effects of the above.

DOE based its analysis on the Impact of Sector Energy Technologies (ImSET) model developed by Pacific Northwest National Laborat ory for DOE’s Office of Energy Efficiency and Renewable Energy. 1 ImSET is a personal computer-bas ed, economic analysis model that estimates the effects of standards on major sector s 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 2002 Benchmark U.S. table aggregated to 187 sectors to estimate the employment and income effects of building energy technologies. 2 Compared with simple economic multiplier approaches, ImSET allows for more complete and automate d 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 econom y and the spending flows among them. The various

15-2 BVM_FINAL_FR_TSD_Chapter15_08-14-09.docsectors have different levels of labor in tensity. Changes in th e level of spending ( e.g. , due to the effects of an amended energy conservation standa rd) in one sector of the economy will affect spending in other sectors, which in turn w ill affect the overall level of employment.

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 invest ment and spending, and government spending). It provides overall estimates of the change in national output for each input-output sector. Then, the model applies estimates of employment and wage income per dollar of economic output for each sector and calculates impacts on na tional employment and wage income.

ImSET calculates the total effect of standa rds on employment, incl uding job creation or deletion, in the manufacturing se ctor. As described above, DOE an alyzed the direct employment impacts ( i.e. , those that would occur at the manufactur ing plants of beverage vending machine equipment) in the manufacturer impact analysis (chapter 13).

Energy-efficiency technology primarily a ffects the U.S. economy along two spending pathways. First, general investment funds are dive rted to sectors that manufacture, install, and maintain energy efficient technologies. The in creased cost of technology leads to higher employment in the manufacturing sector, incl uding beverage vending machines and lower employment in other economic sectors. Second, co mmercial firm spending is redirected from utilities toward firms that s upply commercial production inputs.

15.3 RESULTS

The results show the total effects of energy conservation standards on employment for the selected years. Table 15.3.1 shows the estim ated net national employment impacts of the seven different trial standard levels (TSLs) for the Class A beverage vending machine equipment. A detailed discussion of the TSLs ca n be found in chapter 9 of the TSD. The figure shows that for a given year ove r the period of analysis (2012–2042) , the change in the number of jobs in the economy relative to the number of j obs if there were no change in standards and hence no resulting change in spending a nd cash flow patterns throughout the economy.

Table 15.3.1 Net National Change in Jobs for Class A Beverage Vending Machines
TSL Net National Change in Jobs number of jobs 2012 2022 2032 2042 1 0 13 13 13 2 4 67 69 82 3 17 142 159 172 4 30 221 238 265 5 42 256 285 313 6 44 286 316 344 7 157 402 444 475
Similarly, Table 15.3.2 shows the net nationa l employment impacts of the beverage vending machine energy conservation standards by TSL and specified years for the entire and beverage vending machine markets.

15-3 BVM_FINAL_FR_TSD_Chapter15_08-14-09.docTable 15.3.2 Net National Change in Jobs for Class B Beverage Vending Machines
TSL Net National Change in Jobs number of jobs 2012 2022 2032 2042 1 1 6 6 6 2 1 9 9 10 3 8 41 45 49 4 9 47 52 55 5 58 138 150 162 6 166 193 204 216

As shown in Table 15.3.1 and Table 15.3.2, th e beverage vending machines energy conservation standards have virtua lly 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 standards-compliant equipment costs a few jobs because the investment is capital-intensive 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 eco nomy of the energy savings from the installed equipment more than makes up for the initial in vestment, and the net effect on employment is positive. The long-term positive and increasing imp act occurs because the energy savings in future years are obtained from bot h current and previous efficiency investments reflected in the installed stock of efficient equipment, while i nvestment costs for the production of efficient equipment occur only once.

In summary, DOE estimates that net indi rect employment impacts from a beverage vending machines energy conservation st andard are positive but very small.

15-4 BVM_FINAL_FR_TSD_Chapter15_08-14-09.docREFERENCES

1. Scott, M. J., O. V. Livingston, J. M. Roop, R. W. Schultz, and P. J. Balducci. ImSET 3.1: Impact of Sector Energy Technologies Model Description and User’s Guide . 2009. Pacific Northwest National Laboratory: Ri chland, WA. Report No. PNNL-18412.

2. Stewart, R. L., J. B. St one, and M. L. Streitwieser. Survey of Current Business: U.S. Benchmark Input-Output Accounts, 2002 . October 2007. (Last accessed March 11, 2009.)

< http://www.bea.gov/industry/index.htm#benchmark_io >

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