Peterson Institute’s Prediction of 203,000 Net Jobs Gained is Just More Spin
Link to Inhofe EPW Press Blog
“The first thing the intellect does with an object is to class it along with something else. But any object that is infinitely important to us and awakens our devotion feels to us also as if it must be sui generis and unique. Probably a crab would be filled with a sense of personal outrage if it could hear us class it without ado or apology as a crustacean, and thus dispose of it. ‘I am no such thing,’ it would say; ‘I am MYSELF, MYSELF alone.'” -William James, The Varieties of Religious Experience
We always eagerly await the next iteration of cap-and-trade legislation, for with it comes the inevitable refrain that “this time, it’s different.” Claims that cap-and-trade means fewer jobs, higher energy prices for consumers, a weaker economy-well, maybe for those other bills, advocates say, but not this one. The American Power Act, aka the Kerry-Lieberman bill, is deemed a special case, because, according to one prominent Senate supporter, this time “we got the balance right.”
That same supporter claims that, unlike those other unbalanced cap-and-trade bills, the Kerry-Lieberman bill will actually create jobs-203,000 jobs, in fact, according to a recent analysis by the Peterson Institute. Yet sadly for the bill’s authors, the bill is not sui generis; it’s fairly typical: close scrutiny of the Peterson Institute study shows Kerry-Lieberman is no different than Waxman-Markey and every other failed version of cap-and-trade-jobs will be lost and consumers will suffer.
According to the study, between 2011 and 2020, Kerry-Lieberman would actually kill 479,000 jobs. After tallying the jobs created from, among other things, “clean energy investment,” “adaptation,” and “energy efficiency,” the Institute subtracts those lost in key sectors of the economy because of Kerry-Lieberman. Consider the fossil fuel industry, which would lose 72,000 jobs because of “lower demand for fossil fuels and foregone construction of new fossil fuel power generating capacity. This includes direct, indirect, and induced jobs as well.” The study goes on: “We further subtract the jobs lost when households have less money to spend on other goods because energy has become more expensive.” The number subtracted? 305,000.
Then there’s Kerry-Lieberman’s “macroeconomic effects” caused by “changes in consumer demand.” “This includes,” the authors found, “changes in consumer demand for non-energy goods that are more expensive because of higher energy costs, reduction in investment in non-energy sectors because additional investment in power generation has pushed up interest rates, and changes in the US current account position resulting from a net increase in US investment demand.” Jobs lost: 102,000.
As for those 203,000 net jobs created, the Peterson Institute has some interesting things to say. After the bill’s free allocation of emissions allowances phases out, “resulting in higher energy prices,” the “net effect” is that “after 2025, some of the employment gains in the first decade are clawed back, bringing the 2011-30 average back in line with business as usual.” The authors go on to note that, “While outside the window of this analysis, energy prices will likely continue to increase beyond 2030 as GHG abatement costs get higher.”
As supporters seek to advance yet another version of cap-and-trade-this time one confined to the utility sector-the Peterson Institute study seems to confirm the proverb, “the more things change, the more they stay the same.”