Insight: How Much Do Green Jobs Cost?

Politicians at both the state and federal levels of governments are promising heavy government subsidies to create so-called “green jobs” to help boost our economy. But politicians typically don’t talk about how much those jobs will cost taxpayers, or how many other jobs will be lost due to expensive and misguided energy policies.

To be clear, any new job creation is welcome at a time when our economy is struggling — including green jobs. However, lawmakers must make certain that any efforts to create green jobs do not come at the expense of other jobs that depend upon affordable energy.

In Wisconsin, Governor Doyle and a handful of state legislators have proposed sweeping new global warming regulations that they claim will create 15,000 green jobs in Wisconsin by the year 2025. In reality, those expensive regulations will increase the cost of electricity by at least $16 billion by 2025, and will cost Wisconsinites more than $1,000 each year in higher gasoline and energy costs by the year 2020. 1

Is increasing the price of electricity and taking more money out of the pockets of Wisconsin consumers really a recipe for “green job” creation? Absolutely not. Rather than creating new jobs, a recent economic study published by the nonpartisan Wisconsin Policy Research Institute (WPRI) concluded that higher energy prices would kill more than 43,000 Wisconsin jobs if expensive global warming regulations are adopted by our Legislature.

Common sense dictates that making energy more expensive and burdening families with higher costs will result in job loss, not job creation. There are a number of recent green job experiments that provide real-world examples of the economic cost of green jobs.

  • Similar to the renewable energy mandates proposed by Governor Doyle, Spain imposed heavy government subsidies to promote renewable energy like wind and solar in an effort to spur green job creation. However Spain lost 2.2 permanent jobs for every green job created. Since 2000, Spain has spent 571,138 Euros to subsidize each green job.2
  • Germany’s experience with renewable energy mandates has been similarly expensive. Green job subsidies have far-exceeded average wages, with taxpayer support as high as $240,000 for each job in the solar industry. The green jobs disappear as soon as government support is terminated.3
  • In a recent memo on job creation from the federal stimulus bill, Vice President Joe Biden’s analysis suggests that clean energy manufacturing jobs cost U.S. taxpayers $135,000 per job.4

When considering the cost of $135,000 per green job from the federal stimulus bill, it’s important to understand that these green jobs are temporary. President Obama’s Administration defines a green job as a job that lasts for one year.

A stark example of the fleeting nature of green job creation is a solar power plant constructed in Arcadia, Florida last year. The largest of its kind in the country, the Arcadia project employed 400 workers during peak construction. Yet after completion, there are a grand total of 2 full-time employees.5 With a price tag of $152 million, the green jobs subsidy is $380,000 per worker, even at the project’s peak construction.

Lawmakers must consider whether it makes sense to invest in temporary green jobs which pay far less than what taxpayers are forced to pay to subsidize them.

Equally important, policymakers must understand that expensive new energy mandates, however well intentioned they may be, threaten the loss of well-paying manufacturing jobs. In Wisconsin, manufacturing jobs pay an average of $62,959 per year — more than 35 percent higher than the state average.

We’ve already lost more than 60,000 manufacturing jobs since 2008. We cannot afford to lose more of these family supporting jobs by dramatically increasing the cost of electricity in Wisconsin with the new global warming regulations proposed in Senate Bill 450 and Assembly Bill 649.

If the fuzzy math and creative “job creation” accounting from last year’s stimulus bill has taught us anything, it’s that voters are right to be skeptical of politicians who promise new jobs by waving the magic wand of government spending. Governor Doyle claims that global warming regulations will create 15,000 new jobs by the year 2025, while trained economists say those polices will result in 43,000 lost jobs over the same timeframe. That’s quite a difference of opinion.

Assuming for a moment that Governor Doyle’s ambitious job creation figures are correct, Wisconsinites would spend more than $1 million to subsidize each new green job because the proposed regulations are projected to cost consumers $16.2 billion in higher electric bills. That is not a wise investment by any measure.

As the debate on Wisconsin global warming legislation moves forward, lawmakers must confront three important questions:

Can government create jobs by making energy more expensive for Wisconsin families and employers?

How much should Wisconsin citizens be forced to pay to create temporary green jobs?

How many of our existing manufacturing jobs are legislators willing to sacrifice in the name of green job creation?

These important questions deserve to be answered before the Legislature moves forward with state global warming legislation.
The Insight Column is a weekly column that provides commentary and background information from WMC lobbyists on issues affecting your business. For more information on this topic, contact Scott Manley, WMC Director of Environmental Policy, (608) 258-3400 or smanley@wmc.org .

 

1 “The Economics of Climate Change Proposals in Wisconsin,” Wisconsin Policy Research Institute; November 2009

2 “Lessons from the Spanish Renewable Bubble,” King Juan Carlos University – Madrid, Spain; March 2009

3 “Economic impacts from the promotion of renewable energies: The German experience,” RWI (Rheinisch-Westfälisches Institut für Wirtschaft sforschung) – Essen, Germany; October 2009

4 Wall Street Journal blog, December 15, 2009

5 “Green Jobs America Can’t Afford,” Thomas Pyle, Institute for Energy Research; December 2, 2009