NCPA - National Center for Policy Analysis


December 10, 2009

In an effort to reverse the 10.2 percent unemployment rate, President Obama has directed that funds from various federal agencies and the $787 billion economic stimulus bill be used to create 5 million "green" jobs.  Unfortunately, the president's proposal does not consider the substantial costs of government spending on green jobs.  Indeed, subsidizing green jobs could cause more job losses than gains, say Pete Geddes, an Adjunct Scholar, and H. Sterling Burnett, a Senior Fellow, both with the National Center for Policy Analysis.

The Obama Administration's green jobs program simply shifts wealth from businesses, taxpayers and consumers to politically favored uses.  Citing studies from the U.S. Conference of Mayors, the American Solar Energy Society, the Center for American Progress and the United Nations Environment Program, the administration claims that green investments will provide millions of new jobs.  However, these analyses share a number of flaws, say Geddes and Burnett.

They confuse efficient and inefficient production:

  • Productivity is the output per unit of input; producing the same amount of a good with fewer inputs makes it more affordable, freeing labor, natural resources, equipment and capital for other uses, thus improving a country's economic welfare.
  • President Obama's green jobs program turns this on its head, favoring technologies that employ large numbers of people over technologies that use labor efficiently.

Many of the jobs "created" by government subsidies will not be filled by the unemployed but by workers shifting from one job to another:

  • For instance, proposed global warming legislation threatens to shutter a number of fossil-fuel power plants while boosting employment at wind and solar facilities; moving engineers from traditional power plants to renewable energy facilities should not count as new jobs creation.
  • Finally, these studies only examine jobs created by the government programs, ignoring the jobs destroyed by higher energy prices and the taxes to pay for the increased spending.

The evidence is the government's green jobs push is likely to increase the length of the already growing unemployment line.  That's a bad idea now and at any other time, say Geddes and Burnett.

Source: Pete Geddes and H. Sterling Burnett, "Eco at the end of recession?" Washington Times, December 10, 2009.

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