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

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

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.

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

Three Sources of Net Job Creation for Alternative

Spending Targets

• Labor Intensity– Spending on Workers vs. Machines/Supplies

• Domestic Content vs. Imports

• Wage Levels

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)

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

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

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.

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.

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%

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