cfo.com

Print this article | Return to Article | Return to CFO.com

The Great Green Hope

Is massive investment in green jobs the answer to our economic woes?
Kate O'Sullivan, CFO Magazine
November 1, 2008

Amid much talk in this election year about blue states and red states, another color is being heard from: green. Politicians, mindful of soaring unemployment and wildly fluctuating oil prices, are advocating job creation in clean-energy-related fields. Pundits like Thomas Friedman (particularly in his latest book, Hot, Flat, and Crowded) are calling for enormous investment in clean energy and energy-efficient technologies, while environmental activists are arguing that creating green jobs can save both the economy and the planet.

Now, a new study produced by the University of Massachusetts's Political Economy Research Institute (PERI) and sponsored by the Center for American Progress makes a strong case for billions in federal spending to that end. By employing blue-collar workers in some of the hardest-hit segments of the economy, a focused, short-term effort to make buildings and infrastructure more energy-efficient would significantly reduce the unemployment rate and move the United States closer to energy independence, claim the study's authors. "This would be an effort to rebuild the energy infrastructure of our whole economy," says Robert Pollin, co-director of PERI and an author of the study.

Called "Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy," the study proposes $100 billion in government spending over two years in six key areas: retrofitting buildings to improve energy efficiency; expanding mass transit and freight rail; constructing "smart" electrical grid systems to better manage power demands; increasing the use of solar power; increasing the use of wind power; and developing next-generation biofuels. (Some of the spending has already been authorized, but not yet funded, by the Energy Independence and Security Act of 2007.)

It sounds like a lot of money to spend, particularly given the staggering costs of the financial-market crisis and the Iraq War. But it's less than the $250 billion stimulus package passed by Congress last April, the authors point out. And, they add, the investments in retrofitting public buildings could pay for themselves over time in lower energy costs.

In return for $100 billion, which includes $50 billion in tax credits, $46 billion in direct spending on infrastructure, and $4 billion in loan guarantees, the plan would produce 2 million jobs, contend the authors, 300,000 more than would result from spending the same amount on another short-term economic-stimulus package. Moreover, it would particularly target the hard-hit manufacturing and construction sectors.

No PHDs Required
Indeed, unlike some of the economic-development darlings du jour, such as biotechnology, a green-jobs initiative would create plenty of work that doesn't require an advanced degree. True, a push to develop alternative fuels and further refine technologies like fuel cells and car batteries would require highly skilled engineers and researchers, but the initiative would also create lots of blue-collar jobs. In fact, Pollin prefers not to call them green jobs at all.

"Green investments will create all kinds of jobs," he says. "The term 'green jobs' makes people think that it's something really esoteric. This program would create a lot of construction jobs, manufacturing jobs, and transportation jobs." The immediate jobs created by, say, a building-retrofit project would be followed by a supporting cast of accountants, energy auditors, lawyers, and administrative assistants. Both direct and indirect job creation would then lead to "induced" job creation: those jobs that arise elsewhere in the economy due to the spending of newly employed workers.

While some people might need additional training to learn, say, how to install solar panels, "a lot of these jobs are the same kinds of things people are already doing," notes Pollin. To meet increased demand for wind power, for example, he envisions more jobs for steelworkers, who would be needed to build the parts of a wind turbine. "Manufacturing steel to meet certain specifications — this is a skill people already have," he says.

With 800,000 U.S. construction jobs lost between July 2006 and July 2008, there are a lot of people available to do the work. Eileen Kamerick, CFO at Tecta America, a roofing contractor that installs both traditional commercial roofs and green roofs, agrees that while there may be some training needs, many skills would transfer. "This is a better proposal than having to retool people entirely," she says. "Taking someone who's been a line worker at GM and trying to turn them into an IT worker has always been a bit of a wobbly proposition. This is taking someone who's in construction and teaching them how to do something slightly different in their field." At Tecta America, for example, Kamerick says the same work crew can install a green roof or a regular roof. "You're still working on a roof."

The quality of jobs created is a distinction of the plan, observes Thomas Kochan, co-director of the Institute for Work and Employment at MIT's Sloan School of Management. "This is a very creative way of addressing a very big social need and a very big economic need, and building sustainable jobs that can't be outsourced, because infrastructure is obviously local," says Kochan, who is not associated with the PERI study. "In the past we have had programs where the states have spent monies on various kinds of public needs, but those have typically resulted in very low-wage jobs." In contrast, skilled construction and manufacturing jobs usually command higher pay than many service-sector jobs.


Reality Check
Of course, obstacles to implementation abound. The government's purse strings are being tugged on rather hard at the moment. And while Kochan calls the plan "entirely doable," he notes that new green infrastructure projects could quickly get bogged down in disputes about wages and the question of whether projects receiving federal dollars must use union labor. Pollin himself admits that the plan, while providing a notable employment boost for as long as 30 years as infrastructure projects are under way, does not answer longer-term questions about the U.S. workforce and its qualifications. Indeed, "once the new infrastructure is built, there is no more net job growth from this program," he says. "We're going to have to solve our employment problems in other ways."

But 30 years from now, whole new industries may exist thanks to the continued development of technology and the push to identify alternative sources of energy. For now, an initiative that produces 2 million new jobs while moving the United States to a higher environmental standard and away from its dependence on oil looks like a good place to start.

Kate O'Sullivan is a senior writer at CFO.


Where the Green Jobs Are
Green jobs are not just for workers with advanced degrees. They also include a range of old-economy roles.

BUILDING RETROFITTING: Electricians, heating/air-conditioning installers, carpenters, roofers

MASS TRANSIT/FREIGHT RAIL: Civil engineers, rail-track layers, welders, bus drivers

SMART GRID: Computer software engineers, electrical engineers, power-line repairers

WIND POWER: Environmental engineers, iron and steel workers, truck drivers

SOLAR POWER: Electrical engineers, electricians, metal fabricators

ADVANCED BIOFUELS: Chemical engineers, chemical technicians, agricultural workers

Source: "Green Recovery," by Robert Pollin, Heidi Garrett-Peltier, James Heintz, and Helen Scharber, Department of Economics and Political Economy Research Institute, University of Massachusetts–Amherst, September 2008




CFO Publishing Corporation 2009. All rights reserved.