San Bernardino County Economic Update

A Few Thoughts About "Green Jobs"

There's much talk about the creation of tons of "Green Jobs" to help get people employed.  In his State of the Union address, President Obama said,

"But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean coal technologies.  And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America."

Yet the current trends suggests that the number of green jobs may disappoint many of us.

More production/extraction of fossil fuels will generate some jobs, but they are so specialized that nearly all displaced workers will have to get specialized training before they can handle those jobs.  And if the exploration companies do not have spare equipment for them, it's very unlikely that those companies would invest in the training of new workers and new equipment if they feel that such political support for fossil fuel production will be short-lived.  They will be better off just hold onto their existing sources and get more profit from the more limited supply.

If fossil fuel prices are lowered because of more production, then this inevitably reduces the attractiveness of alternative fuel.  This may therefore slightly hinder the development and investment in alternative fuel.  Conversely, making fossil fuel more expensive will help the adoption of alternative fuel, but that will most likely have negative impacts on jobs in many other sectors of the economy.  This is a tradeoff that is nearly impossible to avoid.

Some "green" activities may actually reduce employment in the long run.  For instance, converting a lawn to rockscape removes the need for a lawnmower, and could reduce the number of jobs involved in power generation, water transportation, garbage removal and disposal.  Solar water heaters reduce the demand for natural gas and that may reduce jobs in gas exploration and transportation if solar water heaters are more widespread.  Those potential reductions in employment are almost never considered in "green jobs" studies.

We must understand that increased environmental protection both creates and destroys jobs.  Jobs are the collateral impact of environmental protection, not the reason to pursue it.  A good environmental protection policy needs to take into account all costs, including the "human costs" which may include a reduction in jobs, recreation options, and convenience.

It's more likely that the government will choose to pursue environmental regulations without full regard of their impact on the businesses, and the loss of competitiveness will cost U.S. jobs at a time of high unemployment.  California manufacturers are already worried about the potential impact of AB32 on their competitiveness.  An ill-designed national program may extend that pain to the rest of the country and cost the U.S. more jobs.  Since the effect of environmental protection, particularly efforts to reduce the emission of greenhouse gases, is global in nature, such a program needs to be global so the participants are not bearing excessive burdens while non-participants benefit from their sacrifices, both on the climate front and on increased business competitiveness.

Introducing our Economic Update Newsletter

We are introducing a sister feature to this blog -- a two-page newsletter with current statistics but minimal analysis.  This newsletter is meant to be a quick reference on what's going on.  You can download the latest edition at http://sbcounty.info/EU_Archive/current_EU.pdf .  Past issues are available at http://sbcounty.info/EU_Archive

New Narrative Now Available

It is at http://sbcounty.info/latest_narrative.htm

I hope to make these narratives more of a regular feature.  There seems to be "urgent" projects all the time so what's very fundamental but not "urgent" get pushed back.

Disappointing holiday sales...

National December retail sales data was a big disappointment.  But who is to blame?  Bad economy?  High gasoline prices?  Retailers' own strategy?

There's no doubt that high gasoline prices bit into consumers' wallets, leaving less net disposable income to spend.  But it is highly doubtful that high gasoline prices could account for the slowdown.  Sure the housing sector is hurting, but the overall unemployment rate is still fairly low, and most people have little reason to worry about their job security at this time.  Job security is perhaps the most important component of consumer confidence, which rose surprisingly in December.  Many companies had to cut back on bonuses last year, and that may have some impact.

But there are some unique factors this year.  The various toy safety recalls confused so many people that some avoid all toys made in China altogether.  Some people may have given out gift cards because they simply do not know what toys are safe, and so they leave the decision to the recipients' parents.

Another thing is the lack of affordable "must-have" items.  iPhones are hot, but they are too expensive to be a common gift, especially since it is only for AT&T customers.  Big screen TVs and GPS systems are most often purchased for one's own use, and so the purchase does not have to be done during the holidays season.  Nintendo's Wiis are still in short supply.  In the fashion world there also was not a dominant trendsetter.

How about the impact of gift cards?  Last year, the estimate sale of gift cards reached $97 billion, according to the Tower Group.  Retailers love these goodies, for they represent guaranteed cash in the bank.  There's also indication that customers are more generous when they use a gift card instead of their own cash.  Gift cards also effectively extend the holiday shopping season by several weeks.  So in effect, the holiday shopping season is not over yet...