Green jobs have been the foundation to any of President Obama’s jobs speeches. “Building a robust clean energy sector is how we will create the jobs of the future,” he said in a speech last month. We’ve long argued that subsidizing jobs comes at the expense of others and will result in net job losses. Sunil Sharan, director of the Smart Grid Initiative at GE from 2008 to 2009, details in the Washington Post how smart metering will create jobs but destroy many more in the process:
It typically takes a team of two certified electricians half an hour to replace the old, spinning meter. In one day, two people can install about 15 new meters, or about 5,000 in a year. Were a million smart meters to be installed in a year, 400 installation jobs would be created. It follows that the planned U.S. deployment of 20 million smart meters over five years, or 4 million per year, should create 1,600 installation jobs. Unless more meters are added to the annual deployment schedule, this workforce of 1,600 should cover installation needs for the next five years.
Although a surge of new digital meters will be produced, the manufacturing process is highly automated. And with much of it accomplished overseas, net creation in domestic manufacturing jobs is expected to be only in the hundreds. In R&D and IT services, high-paying white-collar jobs are on the horizon, but as with manufacturing, the number of jobs created is forecast to be in the hundreds or low thousands. Now let’s consider job losses. It takes one worker today roughly 15 minutes to read a single meter. So in a day, a meter reader can scan about 30 meters, or about 700 meters a month. Meters are typically read once a month, making it the base period to calculate meter-reading jobs. Reading a million meters every month engages about 1,400 personnel. In five years, 20 million manually read meters are expected to disappear, taking with them some 28,000 meter-reading jobs.”
Job destruction through efficiency improvements isn’t a bad thing, but it is when the government forces it upon us. If new smart metering technologies are economically sensible, the private sector will introduce these technologies to the market. Just as the government shouldn’t attempt to create jobs, it shouldn’t protect jobs from being destroyed, either. Sharan writes, “[I]nstead of creating jobs, smart metering will probably result in net job destruction. This should not be surprising because the main method of making the electrical grid “smart” is by automating its functions. Automation by definition obviates the need for people.” We replaced ditch diggers with mechanized agriculture equipment with the end result being a net gain in productivity and wealth. The process of creative destruction allocates capital and labor to better use, increases gains from productivity and makes us all better off. Using stimulus money for smart metering is unnecessary if it such a good idea.
The other way the government can destroy jobs through a clean energy initiative is to mandate and subsidize labor intensive, inefficient, and expensive power sources. If it takes more labor and capital to produce renewable energy, there is a net drain on the economy. Government spending will create some jobs to build windmills and solar panels and work at biomass plants but this diverts labor, capital and materials from the private sector that could be used more efficiently to create even more jobs
An Institute for Energy Research-commissioned study from King Juan Carlos University in Madrid by Gabriel Calzada found that, for every green job created, 2.2 jobs in other sectors have been destroyed. Furthermore, Spain’s government spent $758,471 to create each green job and used $36 billion in taxpayer money to invest in wind, solar, and mini-hydro from 2000-2008. The country’s unemployment rate is currently at 19.4%.
Losing jobs through increases in efficiency and productivity is a sign of progress. Losing jobs through government mandates and subsidies is a sign of Congress.