What’s the difference between creating 5,000 jobs or 75,000 jobs? According to the Michigan Environmental Council there is none. Or maybe the organization is just prone to exaggeration.
A recent press release from the council grossly mischaracterized the number of jobs that would be created if the state were to impose a 25 percent renewable energy standard by 2025. According to the council’s press release, “At least 74,495 Michigan jobs will be created if the Michigan Energy Michigan Jobs renewable energy ballot proposal passes in November, according to a new report from researchers at Michigan State University.” The MSU report was commissioned by the environmental group.
The council’s release conveniently left out that the study estimated the number of “job years,” not the actual number of jobs. For instance, if a worker is hired by a solar power plant and works there for 15 years, that’s 15 job years — not 15 jobs. That lowers the actual estimate over 15 years to 5,000 jobs, rather than the nearly 75,000 the council claims in its release.
Obviously 5,000 jobs would be a welcome addition to the state’s economy, which is struggling with an unemployment rate of 9 percent. But while a job estimate from such a well-respected university shouldn’t be discounted, it is by no means prophetic. Renewable energy mandates have proven to do more harm than good for both ratepayers and the job market.
For a real estimate of the effects this renewable energy mandate would have on jobs in Michigan, you need look no further than the results from the state’s current 10 percent renewable energy standard, which passed in 2008. According to an analysis by the Mackinac Center for Public Policy from the U.S. Bureau of Labor Statistics, the state has seen a 14 percent decrease in so-called “green jobs” since the introduction of the renewable mandate. Even if you allow a “multiplier effect” that’s used by many economists to include indirect jobs, the renewable energy mandate has been a failure as a job-producer.
When government arbitrarily and forcibly supports expansion of a particular economic sector, it typically destroys jobs elsewhere. A 2009 study by King Juan Carlos University in Spain found for every “green job” created, 2.2 jobs were destroyed in the overall economy. Any policy supporting a combination of artificial labor shifts and increased energy rates will cause a net decrease in employment.
Advocates of renewable energy mandates also don’t want the public to realize these laws cause significant increases in energy bills for families and businesses. According to data from the Energy Information Administration, Michigan already has the 16th highest average retail price for electricity in the nation. Electricity prices are based on many variables, but mandating the use of more expensive energy sources has proven to be a significant contributor when it’s been tried in other states.
Electricity prices are 40 percent higher in states with mandates than those without them, according to the Institute for Energy Research. Artificial increases in the price of electricity effectively take private capital out of the economy and redistribute it to renewable power companies that may or may not be able to compete in a free-market system.
The evidence from other states clearly shows increasing Michigan’s renewable energy mandate will unnecessarily raise electricity prices, destroy jobs, and destabilize resource allocation.
So, what is the difference between 5,000 jobs and 75,000 jobs? The answer is 70,000 jobs — and a lot of hot air about how mandates create jobs.
John Nothdurft is director of government relations and Taylor Smith is a policy analyst for The Heartland Institute.
[First published in The Detroit News.]