Renewable energy proponents and advocates of the Keystone pipeline finally agree on something: that the right way to count “job creation” is to focus narrowly on the jobs in the industry they want to boost and ignore the overall impact on employment. Unfortunately, researchers who actually study employment are not on board. ...
The “job creation” justification for government energy policies isn’t new, but its support among economists remains in the range of, well, zero. In the last couple weeks I’ve pinged leading macro, labor and environmental economists – many of whom have worked in the Obama administration – and got the same results that I got when I did this a few years ago: zero support for making energy policy based on job creation.
The problem is that when it comes to creating or destroying jobs, counting the direct industry impact misses a big part of the picture. In non-recession economic times – like today – most of the people who take a newly “created” job are leaving an existing job. Or would have found another job. So, the direct industry impact is smaller than claimed.
Then there are people who are displaced by the new jobs created – the coal miners who worked for the mine that is shut down; the workers at the incandescent light bulb plant; the fracking oil drillers in North Dakota laid off when cheaper crude from the tar sands is carried to market by the Keystone XL; or the workers who would have carried that same oil by rail if the Keystone weren’t built. Of course, many of these people too will find other jobs, but some will become unemployed.
But the fundamental fallacy of counting jobs is that any government policy alters demand, supply, prices and wages throughout the entire economy. Higher energy prices cause some energy-using industries to contract, reducing employment. Higher taxes that pay for subsidizing an energy source make some companies less inclined to expand. Reports of “green job creation” or the “jobs that will be created by Keystone” are just data cherry picking, not real analysis.
Here are some posts on green jobs.