Another Angle on Energy Jobs: Location, Location, Location

Posted by Scott Bittle and Jean Johnson of Public Agenda

It’s probably a safe bet that nearly everything this election year, including energy policy, is going to be viewed through the prism of jobs. And fair enough: the Great Recession cost us nearly 8.4 million of them, after a decade where America barely broke even on job growth. Surveys show the economy as the public’s overwhelming concern, beating out every environmental or international question.

No wonder, then, that proponents of the Keystone XL pipeline focused on its potential for creating jobs. No wonder also that clean energy advocates promote the potential of “green jobs” in a global economy that needs alternative energy sources. President Obama ended up endorsing an “all of the above” approach in the state of the Union address, calling for more tax breaks for alternative energy as well as opening up new oil and gas drilling areas.

We’ve been thinking a lot about jobs lately, and there’s a point that’s frequently overlooked: it’s not just what kind of energy jobs we have, it’s where they are.

The work world has been shifting under our feet because of the combined impact of globalization and technology. Advancing technology is making us more productive, but productivity by definition means getting more work done with fewer people. And technology also is a key factor in globalization, allowing a whole range of jobs to be done anywhere. That’s where the fear of “offshoring” jobs comes from.

Yet the striking thing about a wide range of energy jobs is that they’re so strongly linked to a specific location – and that’s true for both alternative energy and fossil fuels.

When Princeton economist Alan Blinder did his pioneering research on offshoring and globalization, he found that the reasons a job might move offshore aren’t just lower wages or less regulation. The key questions are whether a job must be done in a particular location, and whether it requires face to face interaction.

You can see how this plays out for fossil fuels. Yes, oil in particular is traded in global markets, while technology allows those markets to communicate worldwide. Oil and gas are also shipped all over the world. But the actual oil and gas drilling rigs need to be where the oil and gas is. Coal mines have to be dug where the coal is. When Blinder created a grid ranking jobs by whether they could be moved or not, he cited roustabouts, drilling technicians and other such positions as among the jobs least likely to move. Those jobs stay where they are until the well runs dry — which of course is another issue.

But this also works in favor of alternative energy as well. Electricity sources, in general, have to be relatively close to where the power gets used. If you’re going to install solar panels on your home, then someone has to climb up on your roof to do it, and realistically they’re not going to commute from Mumbai. The jobs for electricians and technicians who will build wind farms, solar facilities, and the new power grid are all going to be created here.

Manufacturing that equipment, however, is another matter. The solar panels themselves can be shipped from China – and so, for that matter, can the drilling equipment used in oil and gas fields. The real question on energy jobs isn’t whether we’re going to produce or install energy here in the United States. It’s whether we’re going to build the equipment.

But that takes us back to the core reasons why manufacturing jobs are declining not only in the United States but in nearly every Western nation: technology is automating a lot of the routine tasks that used to be done by workers on assembly lines. And lower wages and rising education levels make developing nations a strong alternative for the manufacturing jobs that are left.

These are big picture trends that are hard to overcome with the tools that politicians usually deploy, like tax credits and trade barriers. It’s not impossible—the calculations companies make about whether to manufacture here or abroad can be really complex and constantly shifting. But as this New York Times story about the iPhone shows, even when something’s invented here, there can be big hurdles to building it here. According to the Times, Apple needed 8,700 engineers to supervise 200,000 workers to manufacture the iPhone. Company managers estimated it could take nine months to find that many engineers here.

Any energy policy—no matter what kind of energy it favors— produces jobs here in the United States. But clean energy advocates should remember that, for most Americans, job creation isn’t some talking point you throw in as an afterthought. It’s the public’s core concern. It needs to be addressed without overpromising – or underdelivering.

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