Here’s the claim. The Green New Deal and all those other supposedly anti-fossil fuel policies will destroy jobs. One Fox News report claimed 3.4 million oil, gas, and coal jobs would be eliminated. Naturally, the proponents of green policies say the opposite. We have all read the clashing claims buttressed by think tank reports and caution that oil workers, for example, who lose jobs may not be able to find replacement jobs paying as much.
With all those charges and countercharges, we decided to look at a few numbers in order to frame the issue. No econometric models. First, employment numbers. The National Association of State Energy Officials publishes what may be the most useful numbers, because they include suppliers, outside workers, etc. In other words, the industry and those who service it. ( See Figure 1):
Figure 1: Total, employment (millions)
Just looking at the employment numbers and applying some common sense,
we should expect job losses in the Fuel sector, many well-paid and specialized. The Motor Vehicle sector might lose, too, if electric cars are simpler to build and service. But, since electrification is a key aspect of green policy, and new technologies will permit more installation of small generating and storage devices in homes and offices, we should expect gains in Electric Generation and in Electricity Transmission, Distribution, and Storage and in Energy Efficiency. (The Organization for Economic Cooperation and Development did a study published in June 2017 which concluded that, on an international basis, the switch to green resources would lead to more labor-intensive service jobs at the expense of traditional energy employment and but not to a significant change in employment levels. In other words, pretty much what we expect here.)
So far, none of these conclusions qualify as profound, and the job consequences of green policy do not look dire. But, here’s one problem. The decline in Fuel jobs will be concentrated in a few states while the job increases will be spread thin all over the country. And some of the service sector jobs will not have the same salaries as those lost in Fuel. That makes for political trouble because oil state politicians will be far more motivated to prevent job losses than those elsewhere to protect new employment. It means that policymakers will have to figure out how to locate green jobs in the oil and coal-producing states as an offset. And workers, in some cases, will earn less.
But there is another factor that should be in the analyses but apparently is not. There is no way the electric sector can service a green economy without engaging in a massive capital expenditure program that will lead to literally thousands of new, high paying construction jobs.
Since 2014, when they peaked, oil and gas capital expenditures have fallen by one third while electric capital expenditures have risen one third. The two industries’ capital expenditure programs are now of similar size. According to some estimates, the oil and gas program could rise over the 2014 levels within a few years. But, get this, the electricity capital expenditures in the US will have to at least triple in order to decarbonize and modernize the industry. ( For a full analysis of how and why electric industry capital spending will rise, see Leonard S. Hyman and William I. Tilles, “Electricity decarbonization is not that expensive, so let’s get on with it’, available on the blog page of lenhyman.com. ) That is where to expect new high paying jobs.
All in all, the greening of America will displace some jobs and create others, but not necessarily in the same place. This won’t be the first regional economic shift in American history. Tackling the problem now to deal with potential job losses seems a better policy than ignoring it until the Wile E. Coyote moment.
By Leonard Hyman and William Tilles for Oilprice.com
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