Green investments and the labor market: How many jobs could be generated and what type?

Source: Josh Bivens, John Irons, and Ethan Pollack, Economic Policy Institute, EPI Issue Brief #253, April 7, 2009

The budget put forward in March by the Obama administration clearly commits to reducing carbon emissions as a means to fight global climate change. Specifically, the Obama budget advocates on behalf of a “cap-and-trade” policy that would put a price on carbon emissions.

However, to aid the economic transformation that a cap-and-trade system will jumpstart, new federal investments are needed. These new investments carry the potential to provide economic benefits that go beyond the primary one of emissions reduction; they hold out the potential for new jobs in the economy. In the near-term, there is no more pressing need than job creation: the U.S. economy has lost 5.1 million jobs over the past 15 months. In the longerrun, even if the economy approaches full employment, green investments carry the potential to change the type of jobs in the U.S. economy in ways that could help push back against the rising inequality that has characterized most of the past three decades.

This Issue Brief draws on the methodology described in an EPI Working Paper (Bivens, Irons, and Pollack 2009) in order to determine the labor market impact of the green investments outlined in Obama’s budget. Our central findings are that a commitment of $100 billion annually in new public investments over the next decade would yield:
• Approximately $160 billion in additional output annually for the next two years, which translates into approximately 1.1 million net new jobs created.
• An increase in the relative wages of those 70% of U.S. workers without a four-year college degree by almost 0.5% each year that the increased committment to green investments persists. While modest, this amount does represent a wage increase for high school graduates that is roughly 40% as large as the entire increase this group has seen since 1979.
• An increase of approximately 100,000 in the number of unionized jobs in the United States (even in the unlikely case that all of the jobs supported through this new spending merely displaced currently existing jobs).

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