At Solyndra, More Jobs Lost—and Even More Jobs Lost

Nicolas Loris / June 14, 2012

Documents obtained by The Bay Citizen under the Freedom of Information Act revealed that the Solyndra bankruptcy resulted in 1,861 people losing their jobs—over 700 more than the defunct solar company previously reported. In reality, the job loss count is even higher than that. What hasn’t been counted are the jobs that could have been created with that half-billion-dollar government subsidy.

The subsidized Solyndra received one of the first stimulus loan guarantees, a $535 million loan. That money did not fall straight from the sky to Solyndra’s headquarters. For the Department of Energy to award the handout, the federal government had to borrow that money or raise taxes at a later date. Either way, the government is extracting the money from U.S. taxpayers. It gets back to that quirky saying economists love to use all the time: There is no free lunch. Government “investments” have a cost.

So with the government dropping half a billion in taxpayer money on Solyndra, there’s the direct loss of nearly 1,900 employees, and there’s the opportunity cost of what the private sector could have done with the labor and capital diverted to Solyndra. When Gabriel Calzada of King Juan Carlos University calculated the government expenditures used to subsidize green jobs in Spain, he found that same amount of expenditure could have been used to support more private-sector jobs. He calculated for every green job created by the government, 2.2. jobs were lost in the private sector.

If an energy source is not economically competitive, then the government should not artificially prop it up to create a market that wouldn’t exist without the subsidy. Subsidizing inefficient technologies is an economic drain, not an economic stimulator. Even with the subsidy, Solyndra could not stave off bankruptcy and, sadly, had to lay off 1,900 employees. But America lost much more than that.