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Green Growth and Good JobsIPED Conference
Chicago, ILAugust 8, 2008
Prof. Robert PollinDepartment of Economics and Political Economy
Research Institute (PERI)University of Massachusetts-Amherst
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Building Clean-Energy Economy Historic Opportunity to Create
Good Jobs
• Long-term problem of wage stagnation
• Globalization pressures on U.S. Labor Market– Alan Blinder—1/3 of jobs could vulnerable to
outsourcing
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15
16
17
18
19
20
50
100
150
200
250
300
60 65 70 75 80 85 90 95 00 05
Figure 2.2 Average Real Wages and Productivity Level
in the United States, 1960 - 2007
dolla
rs/h
our (in 2
007
dolla
rs)
Pro
ductivity in
dex
Productivity level
RealWages
$19.34in 1972
$17.42in 2007
Source: U.S. Bureau of Labor Statistics
Note: Productivity index measures output per hour of all persons in private business.Wages are median hourly earnings in 2007 dollars for nonsupervisory workers in the private sector.
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How Clean-Energy Investments Creates Jobs
• Consider A Mixed Strategy of Clean-Energy Investments– Three Conservation Strategies
• Building Retrofits• Mass Transit/Freight Rail• Smart Grid
– Three Renewable Energy Strategies• Wind• Solar• Biomass
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Three Sources of Net Job Creation for Alternative
Spending Targets
• Labor Intensity– Spending on Workers vs. Machines/Supplies
• Domestic Content vs. Imports
• Wage Levels
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Table 3.1.Relative Employment Creation through Fossil Fuel vs. Clean Energy Production$1 Million in ExpendituresHypothetical Case Based on Representative Figures
“Fossil Fuels” “Clean Energy”
Labor Intensity of Production
30% spending on labor= $300,000
60% spending on labor= $600,000
Domestic Content 80%= $240,000 U.S. wage bill
90%= $540,000 U.S. wage bill
Average Compensation $60,000 $50,000
TOTAL EMPLOYMENT 4 JOBS(= $240,000 wage bill/$60,000 wage)
10.8 JOBS(= $540,000 U.S. wage
bill/$50,000 wage)
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2
4
6
8
10
12
14
16
Figure X.Total Job Creation by Alternative Energy Spending Areas
To
tal
job
s p
er $
1 m
illi
on
of
spen
din
g
Oil3.4
Coal4.8
Nuclear2.9
Retrofits12.8
MassTransit
15.4
SmartGrid10.1
Wind10.4
Solar10.4
Biomass12.3
Figures are total number of jobs created through$1 million in spending
Source: U.S. Department of Commerce Industrial Survey
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2
4
6
8
10
12
Oil2.7
Coal4.0
Nuclear2.6
Retrofits9.4
MassTransit
10.5
Sm artGrid8.9
Wind9.0 Solar
8.7
Biom ass6.4
Figure X.Number of Decent Jobs Created by Alternative
Energy Spending Areas
Figures are numbers of jobs paying over $32,000/year per$1 million in spending
Dec
ent
job
s p
er $
1 m
illi
on
of
spen
din
g
Source: See Appendix 2
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Figure 1.Direct and Indirect Job Creation through
$150 Billion in Spending
GreenStimulus
1.9 million jobsHousehold
Consumption-Based Stimulus
1.6 million jobs
Spendingon Oil
510,000 jobs
Source: U.S. Bureau of Economic Analysis (2006) and authors' calculaltions.
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Table 1.Total Job Creation through$150 Billion Green Stimulus Program
Direct Jobs 1,169,000
Indirect Jobs 710,000
Induced Jobs 564,00
Total Job Creation 2.5 million
Source: U.S. Bureau of Economic Analysis and authors’ calculations.
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Impact of Green Stimulus on Current Labor Market
• U.S. Labor Market July 2008– Unemployed = 8.8 million of total market 154
million– Official unemployment rate 5.7%– Creating 2.5 million jobs reduces
unemployment to 4.1%
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7.0
7.2
7.4
7.6
7.8
8.0
8.2
7.6million
+5.3%
8.0million
-1.2%
7.9million
-9.7%
7.2million
Mil
lio
ns
of
con
stru
ctio
n j
ob
s
July 2005 July 2006 July 2007 July 2008
Source: U.S. Bureau of Labor Statistics
Figure 2.Construction Employment in the United States
July 2005 - July 2008
Note: July 2008 figure is preliminary