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Energy Economics Weekly Briefings

2019 U.S. Energy Employment Report: “New Energy” Jobs Growing Faster Than National Average

Written by: Ellen Hughes-Cromwick

The National Association of State Energy Officials (NASEO) and Energy Futures Initiative (EFI) just released the 2019 U.S. Energy & Employment Report (USEER).   The report include five sectors of the U.S. economy that have energy-related activity:

  • Fuels
  • Electric Power Generation (EPG)
  • Transmission, Distribution and Storage (TDS)
  • Energy Efficiency
  • Motor Vehicles

The report indicates that 6.7 million people were employed in energy-related sectors of the economy last year, representing 4.6% of total U.S. employment.  Energy jobs grew by 2.3% over the prior year, or 151,700 job gains over 2017 levels.  This compares to overall nonfarm payroll employment growth of 1.7%.

The “traditional” energy sectors — fuels, EPG, and TDS — mask the importance of renewables “new energy” jobs.  For example, solar energy firms employed 242,343 people who worked on solar-related job tasks for most of their work day.  Nearly 75% of these solar jobs are in construction and installation.  Professional business services for solar stood at 48,000 jobs last year, and manufacturing just 46,500.  Add to this about 93,000 workers who spent under 50% of their time on solar tasks. Solar jobs actually declined last year by 3.2% even as the gigawatt hours of capacity grew, reflecting overall growth in the productivity of solar construction and installation as well as some softer trend in demand given tariff increases.

Wind energy firms employed an additional 111,000 workers last year, or 3.5% above 2017 levels.  The following chart from the USEER shows that solar and wind comprise 45% of all energy-related jobs in the electric power generation sector of the economy.  Including hydro, the clean energy job share rises to 54%.

These trends are encouraging and quite consistent with even the oldest of economic theories developed by Joseph Schumpeter who coined the term “creative destruction.”  Growth in new energy jobs will more than offset the old energy jobs as the economy transitions to new technologies designed to reduce CO2 emissions.  And one of the benefits of the innovation now under way in the energy sector is the fact that costs are coming down, resulting in competitive, stand alone (i.e., without the help of policy stimulus) companies who can compete and grow over time.

The recent implementation of tariffs on solar panel imports hurt solar photovoltaic (PV) module shipments and contributed to the loss of nearly 8,000 solar jobs in the U.S. during 2018.  This represented the second year of solar job declines.  Shipments are down at an annual rate of nearly 45% since 2016 (see chart below).  Tariffs on imports raise the cost of the product for consumers and businesses who buy these units, thereby reducing demand growth.  The solar panel and module tariff rate of 30% in 2018 will fall by 5% for each of the following 3 years, with the expectation that four years of protection could help revive the domestic industry.  However, this expectation fails to recognize the importance of solar construction jobs and consumers who buy solar panels for homes:  Raising the cost of these products has diminished sales growth.  With this reduction in growth has come an adverse decline in solar-related employment.  To be sure, the solar panel and PV module manufacturers were hurt by the significant competition from imports, particularly Korea.  Both Korea and China have filed complaints with the World Trade Organization (WTO).

 

Despite these job losses, the USEER indicates that solar capacity continued to rise, reaching 11.06 gigawatts last year.  States like New York have developed a mission to “advance innovative energy solutions in ways that improve New York’s economy and environment.  They began three years ago to collect data on clean energy jobs in order to gauge what market forces were at play and how the workforce was responding to these emerging sectors.  As they quantified the skill gaps, the state government responded by implementing a $70 million workforce training program.  The result has been that as of January 2019, New York state ranks 6th in terms of solar PV module shipments and 4th in terms of solar jobs (2018).

Key Takeaway

New energy employment will continue to outperform overall job gains in the economy as consumers and businesses respond to lower costs of these technologies.  There is much enthusiasm among college students for Solar Spring Breaks, with both Michigan State and the University of Michigan joining teams last week to install solar panels in low income communities across the country.