The Bureau of Labor Statistics (BLS) counts the number of “green“ jobs in the U.S. economy and earlier this summer its methodology for determining whether a job was “green” came under fire in a Congressional committee hearing when we learned that oil lobbyists, antique store operators, and sales persons at used record stores are “green” jobs. While it is appropriate for the BLS to measure employment in all sectors of the economy it is foolish to make an increase in “green” jobs a policy goal. “Green” jobs represent the cost, not the benefit, of investments in cleaner energy technology. The benefits of “green” investments are cleaner air and water. The U.S. government should evaluate environmental policy by measuring improvements in environmental quality relative to the costs of achieving those gains. The policy goal should be to achieve cleaner air and water at the lowest cost which typically means with fewer “green” jobs. Even if the Obama Administration’s loan guarantee program created many new “green” jobs (which it didn’t) that would not make the initiative a success. Small gains in environmental quality per job created (or dollar spent) is inefficient. It is costly to divert resources to “green” jobs that provide little benefit to the environment.
A corollary to this argument is that we should not put high tariffs on solar panels imported from China to protect “green” jobs in the U.S. even if Chinese manufacturers are selling their products for less than the production costs. Unfortunately this is precisely what is happening. If Chinese manufacturers selling solar panels to the U.S. for less than cost is bad for our economy then receiving free solar panels from China must be extremely harmful. Of course that is absurd. If foreign producers are willing to (perhaps) foolishly subsidize the production of solar panels and sell them to us for less we should accept their gift.
Jobs are the by-product of wealth and value creation not a means unto themselves. The value of cleaner air and water is not directly measured in GDP. Clean air, rivers, and oceans are public goods and not traded in markets where prices reveal marginal valuations. (Of course solar panels and windmills are traded in markets and if it is profitable for U.S. companies to sell these products overseas, without subsidies from the U.S. government, more power to them.) The additional costs of generating cleaner energy, including the wages and salaries paid for “green” jobs, are included in GDP. However, investments in new energy technologies can be expensive but not valuable; Solyndra is a notable recent example. As long as our goal seems to be the creation of more “green” jobs, whatever the cost, we will continue to make errors in environmental policy.