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  • Obama’s Green Jobs Plan: Losing Jobs through Efficiency and Inefficiency

    Windmills

    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.

    Posted in Energy [slideshow_deploy]

    5 Responses to Obama’s Green Jobs Plan: Losing Jobs through Efficiency and Inefficiency

    1. Jim White, Florida says:

      Sharan's math on jobs lost assumes that a meter reader takes 15 minutes to read one meter and can only read 30 in a day. Meter readers read more like 500 meters in a day, taking the loss to 1680 jobs compared to 1600 created by installing the smart meters. See my post here: http://seminal.firedoglake.com/diary/31956 for details.

    2. John B. San Diego says:

      Mr. Loris, Spain is definitely no model to follow on "Proposed Green Job Creation" I agree 100%! However isn't Spain the next of the so-called P.I.G.S. to go down after Greece?

      This is all about ideology, instead of creating real long term high paying jobs and dependable renewable energy isn’t it?

      I think, but I will check with my local energy provider, that meter readers perform more tasks than actual documentation of readings at each meter.

      I will check in personally with officials at my energy provider and get back with real credible info Sir.

      BTW a single lightening strike in my local area was rumored to have disabled approx.25 large wind generators.

      I have physically seen these wind generators disassembled and non-official word is parts need to arrive from China to get that wind farm back on line. I will get official word on this also and get back.

      JB####

    3. Pingback: PA Pundits - International

    4. John McDonald, Atlan says:

      John McDonald, the general manager of marketing for GE Energy's transmission and distribution business would like to clarify GE’s position, as we take a holistic view of the smart grid. We believe that it is important to modernize today’s electrical system, especially as our nation’s energy appetite continues to grow. Investments in smart grid and other green energy innovation will enable us to more effectively integrate renewables onto the grid, while at the same time, helping consumers become more informed about their energy usage and resulting costs.

    5. Nellie McConnell The says:

      Our country is in one mess! When you look at Saudi Arabia and what they have done with the oil money we are paying for! There towns are using solar energy and very clean.,

      The first thing we need to do is get the natural gas down here from Alaska, drill if wh have too. Get off foreign oil. We can get our country out of debt if we don't have to use the foreign oil.

      The cost of oil to get to work, heat or ?? is killing our pay check.

      This is all about OIL in the middle east!

      Obama doesn't have a clue of how to run this country and get it out of debt. Our governement is selling us out to China.

      Buy a new frig and get a rebate! Giving more money for rebates we don't have too give. Then I would have to buy it from China! I want to be able to have a choice of what country I want to buy from. I don't want Chinese junk! A 2400 dollar frig that only lasts for 5 year is not acceptable.

      Bring our jobs home is what our government needs too do.

      Cloose our borders! Send the illegals home as we don't know who these people are and they are causing a big problem with employment here in CA.

      AZ gov has the right answer! Illegal is illegal! Obama is not taking into condideration that our country is open to terriors with open borders, illegals, drugs and ?? We are dealing with gangs, drugs, prositution, health of these illegals, child abue. Cost of keeping them on Welfare and medical. God Bless America.

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