Now that the sequester has officially begun, people are wondering what the impacts will be, both long term and short term. The message from the two sides of the political spectrum could not be more opposite. Republicans are confident that the concern is overstated, and the wasteful federal government needs the motivation to start effectively managing its operations. The Democrats, on the other hand, are convinced that the arbitrary cuts to critical federal programs will cause significant damage that will reverberate throughout the economy. Almost all agree that there will be short term economic pain, but what direct and indirect effects will the sequester have on jobs in the clean energy sector, and what does it mean for developing a workforce that can effectively implement a transition to sustainable energy going forward?
Most economists believe that, while the macroeconomic impact of sequestration is not catastrophic, the timing is poor given that the overall economy is on the heels of the first financial quarter that growth slowed since the recovery began. For the clean energy workforce, which has benefited from discretionary programs such as job training grants, the timing is even worse. Ironically, the same programs will see greater need as a result of the sequester, which is expected lead to public sector employee layoffs and slower economic growth. The programs that have been used to put displaced workers and veterans to work performing energy audits and joining solar installation crews stand to lose at least $460 million in 2013 if the sequesters go into effect.
Despite chronically high unemployment, clean energy companies insist that they have trouble finding workers with the right skills. Despite mixed views in the political arena, the solar, wind, and energy efficiency industries have grown rapidly in recent years, in part due to the public commitment to developing human capital specifically for these industries. The American Recovery and Reinvestment Act provided $60 million for green workforce development, a drop in the bucket for the federal budget, but a significant commitment for emerging sectors. This investment seems to have paid off, at least compared to other spending that is on the chopping block for the sequester, namely the armed forces. A 2011 study by the Political Economy Research Institute at University of Massachusetts found that each $1 invested in the green economy generates 1.5 more jobs than each $1 invested in the military. After stimulus spending however, the commitment to workforce training has already been steadily cut. With the sequester, 2013 marks the sharpest decline in investment in America’s workforce in at least 50 years.
The cuts will mean drastic reductions in the effectiveness and robustness in state and local workforce training programs. The National Skills Coalition estimates that Workforce Investment Boards will be forced to turn away nearly 400,000 adults, youth and dislocated workers. Moreover, Vocational Rehabilitation programs around the country will be able to serve 78,000 fewer disabled individuals. While not all of these trainees would be set to join the clean energy economy, DOE Secretary Steven Chu cited cuts to these programs as “slowing down the significant advances made in making solar energy cost-competitive such as solar industry training that is target at military veterans and provided to 261 community colleges.”
With reports suggesting that, even without the sequester, the demand for skilled labor in the solar industry may soon outstrip supply, these cuts could be very costly for the nascent industry. In addition to the public dollars in research and development that have considerably reduced the price per watt of solar energy, the report shows that a trained workforce performs installations that result in fewer problems at the time of inspection and, as such, have a direct impact on lowering costs for project developers, consumers, and inspection authorities.
In addition, the sequester threatens the job gains that these workforce development programs have made. In his congressional testimony, Steven Chu also stated that “funding restrictions under sequestration will reduce by more than a thousand the number of homes that would be weatherized in 2013 and could result in the unemployment of skilled weatherization professionals.” This is significant, as the residential energy efficiency sector is particularly well suited to provide displaced and unemployed workers with well paying jobs. The industry generally has low barriers to entrance and no specific experience necessary to get an entry level BPI building analyst certification.
No doubt, there is something to be said about government inefficiency. There is room for improvement in nearly every aspect of federal operations. Still, the sequester is likely to be harmful to the clean energy industry, one of the few bright spots in recent years. While main competitors in Germany and China are doubling down on their funding and support for these industries, we are cutting back. In the late 1980s, Congress held a press conference on Capitol Hill during which one member picked up a sledgehammer and smashed a Toshiba radio into tiny pieces as a symbol against the Japanese expansion in the technology market. In 2013, instead of getting angry at global competitors encroaching on the massive clean energy market, we are getting angry at our own government for supporting it.
Comly Wilson is a research associate with CleanEdison.