Jobs Don’t Determine a Project’s Value, Economist Argues. Costs and Impacts Do.
Energy projects’ value should be weighed based on their costs and impacts, not their potential to create jobs, according to a University of California, Berkeley economist who believes the job calculations are almost always misleading—whether they apply to pipelines or renewable energy installations.
“The problem with statistics like these isn’t just their purveyor’s bias: It’s that all the numbers are inherently misleading,” states New York Times opinion writer Jacques Leslie, citing UC Berkeley’s Severin Borenstein. “Regardless of political outlook, economists generally agree that job numbers don’t convey the value of a given project or sector.”
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The two authors equate job estimates on all sides of the energy divide, from Donald Trump claiming 28,000 jobs from the Keystone XL pipeline (the State Department’s actual estimate was 3,900), to the U.S. Environmental Defense Fund attributing 4.0 to 4.5 million positions to the U.S. clean energy sector. Leslie says Borenstein laid out the flaw in that logic in a 2015 blog post, The Job Creation Shuffle.
“Most of the people who take a newly ‘created’ job are leaving an existing job. Or would have found another job,” Borenstein wrote. “Then there are people who are displaced by the new jobs created—the coal miners who worked for the mine that is shut down” or “the fracking oil drillers in North Dakota laid off when cheaper crude from the tar sands is carried to market by the Keystone XL.” [Except that tar sands/oil sands bitumen isn’t cheaper to produce than fracked Bakken oil—but that may not undercut the underlying argument. Ed.]
Ultimately, “all sorts of things, from government policies to variations in energy prices and taxes, affect employment,” Leslie states. Which means, Borenstein wrote, that “reports of ‘green job creation’ or the ‘jobs that will be created by Keystone’ are just data cherry-picking, not real analysis.”
Following Borenstein’s line of reasoning, Leslie suggests assessing projects’ worthiness with “cost-benefit analyses that include both the projects’ direct costs—the sort of thing that investors base decisions on—and their ‘externalities,’ the costs and benefits to society such as air or water pollution or useful knowledge uncovered by research and development.”
For fossil projects, he adds, that calculation should include a measure of the social cost of carbon—a measure the Obama administration placed at US$45 per ton as of 2020, but that Donald Trump’s Environmental Protection Agency downgraded to $1 to $6, partly by ignoring international impacts of an utterly global climate crisis.
“Carbon dioxide is a global pollutant that has impacts everywhere, regardless of where it’s emitted,” Leslie counters, citing Resources for the Future President Richard Newell. “And even if many of the impacts—for example, increased migration or economic or political upheaval—occur in other countries, they can affect the United States in unpleasant ways. Perhaps more important, the United States’ willingness to curb its emissions would encourage other nations to limit theirs, a necessary step toward reducing climate impacts here.”