Illustration by Mark Beauchamp

By Scott Sheely, Executive Director
Lancaster County Workforce Investment Board

Background

For many years employment in US manufacturing has been in sharp decline. Domestic manufacturers have scaled back, outsourced, or just plain closed down. As a result, US manufacturing has become the “less desirable” industry sector for many workforce boards, economic developers, training providers, and workers themselves. However, in recent times a number of various factors (technology improvements, “inshoring,” and a weak dollar, among others) have changed the face of domestic manufacturing, making it more profitable and productive. As a result, in some regions manufacturers are looking to hire and are having great difficulty finding good potential employees—even amidst high unemployment. This seems to indicate that while the general operations of many manufacturers have changed, the approach to training has not.

This is the situation in south central Pennsylvania, where, despite the recession, our manufacturing sector, which is represented by food processors, packagers, printers, wood products firms, and even biotech has remained very productive and in constant need of qualified employees.

So, as workforce developers, how can we get ourselves up-to-date and assist our ever-changing manufacturing sector? As a general rule, I have found that it’s a relatively simple process. First, be very familiar with the needs, wants, and activities of local industry and second, develop training that directly addresses their needs.

With this in mind, I want to talk a little bit more about how the Lancaster County Workforce Investment Board has been working to address the broad needs of our local manufacturing companies. The results of our efforts have led to significant improvements in the quality and the transferability of skills of our workforce, the satisfaction of our industries with the people we train, and the effectiveness of our investment of public money. I believe our findings could be particularly relevant and useful to many other communities struggling to know what to do about manufacturing.

Why Manufacturing?

Before I get to that, some of you might be wondering, “Why should we continue to focus on manufacturing?”

Here are a few reasons:

• First, these industries are often the source of what I like to call “gold-collar jobs,” which are generally higher-skill, higher-wage, and high-demand occupations.

• Second, these jobs tend to have high “ripple” or multiplier effects. Manufacturing is such a unique industry because it’s almost entirely an export industry. Its products/services are shipped to other regions, states and nations, and when that happens, money from those areas comes back into the local community. This is very important to the local economy because the outside dollars will be spent by the manufacturers on supplies, services, and wages that will drive employment in many other sectors—places like doctors’ offices, grocery stores, and city hall.

• Finally, while it’s true that domestic manufacturing is scaling back on workers, it’s also true that the industry as a whole is becoming more efficient. This means that while employers might need fewer employees, the ones they keep will generally be responsible for more and as a result will be in much higher demand.

The big point here is that if we want to make the wisest investments in training that will lead to greater community prosperity, we need to focus on those sectors that drive money into the community, provide good employment, and are being demanded by the larger economy (i.e., sectors that export goods). Manufacturing is one of those region-driving sectors.

Finding and Understanding the Key Skill Sets

So to really help our local manufacturers we needed to get a better understanding of their skills needs. After many conversations, we generally found that they need people who are “broader-based,” with more troubleshooting abilities. This was interesting because it goes beyond the scope of more traditional machine operators or industrial maintenance occupations.  So we determined that manufacturers overwhelmingly need a skill set that can both service and maintain the increasingly sophisticated automated equipment that is driving domestic manufacturing.

Our research led us to a skill set called “mechatronics,” which has become a generally accepted occupation in Europe and is growing in recognition here in the states. So what is mechatronics? According to Keith Campbell, Project Manager for the Mid-Atlantic Mechatronics Advisory Committee and the Industrial Maintenance Center of Pennsylvania, mechatronics is “. . . the synergistic application of mechanical engineering, electrical engineering, control engineering, and computer science to make useful products.” Mechatronics effectively expands the traditional skill sets of mechanical and electrical engineering found in industrial maintenance to include more high-tech skills commonly associated with electronics and computer networking.

We were very pleased to find this, but realized it would need to be refined to address the specific needs of our local employers. This refining involved three key steps.

First, we needed to understand how and why mechatronics was originally developed. While the Europeans coined the term, training for mechatronics in the United States has several origins. First, several years ago Amatrol, an Indiana-based curriculum development company, in partnership with the US Department of Labor and Midwestern companies, pioneered the development of an “Advanced Manufacturing Integrated System Technology” certificate to better address the skills needs of domestic manufacturers. The program was first implemented as a certificate and is now offered at more than a dozen Midwestern community colleges and several in Pennsylvania.

Next, we took this knowledge of how mechatronics was currently being used and meshed it with what we were learning locally. First, only a small percentage of the manufacturer’s employees actually find their way to the job through formal education. Most follow a career path from machine operator or an alternative path out of manufacturing trades such as millwright, machinist, or welder.  Second, local manufacturers were needing workers with more of a “systems view” into solving problems—essentially a multi-skilled problem-solver who could handle the four or more individual disciplines often needed to solve complicated machine operations problems and, in the process, reduce downtime, and increase productivity.

Finally, we took this info and worked with Reading Area Community College (RACC) to develop an associate’s degree in Mechatronics Engineering Technology (MET), one of the first of its kind in the United States. The new degree used the Advanced Manufacturing Integrated System Technology certificate as its credential and the Amatrol online curriculum as its base with a little additional region-specific content. Since we created the program, John DeVere, Dean of Workforce and Economic Development at RACC, has also developed a way to give academic credit for training that begins in the non-credit workforce education world for incumbent workers, dislocated workers, or emerging workers, and the Berks and Lancaster County Workforce Investment Boards have also created a consortium of 35-plus industry partners and secured funding to provide the training to incumbent employees at participating companies.

The Result

Since the program was implemented three years ago, 250-plus incumbent workers have been trained. We currently have about 35 dislocated workers enrolled in the program. The actual training is provided via online instruction and is followed by practice and evaluation in fully-equipped simulation laboratories at RACC and the Lancaster County Career and Technology Center.  Students from local high schools may also start the program in their senior year, using the articulations with RACC to get advanced standing at the community college. Finally, for the past year we have been using our ARRA funds to provide this in-demand training to a substantial number of dislocated workers.

Can it be Replicated?

As more and more people have become familiar with our success, many have asked if the program could be replicated. For help with this, we reached out to the Packaging Machinery Manufacturers Institute (PMMI). As an industry, packaging is one of the highest-volume users of automated equipment in the nation. PMMI was interested in our offer and helped to organized a meeting in Indiana to bring educators from Pennsylvania, Minnesota, Wisconsin, Indiana, and North Carolina together to identify latest skills needs for the automation industries.

After the input was collected, PMMI and the Industrial Maintenance Training Center of Pennsylvania began working with the US Department of Labor to build a Mechatronics Competency Model as a part of the Competency Model Clearinghouse. That model defines competencies from basic skills in manufacturing to much more specific occupational skills such as mechatronics. It was approved and added to the Clearinghouse earlier in 2009.  See http://www.careeronestop.org/competencymodel/ for more information.

In the midst of all this, we realized that the mechatronics engineering technologist occupation had yet to be defined in the Standard Occupational Classification (SOC) system. So we contacted the Department of Labor and the folks who run O*NET, which is an occupational database operated by the US Department of Labor, to see what we could do to further inform their research and get this occupation officially recognized.

To build our case, we turned to Economic Modeling Specialists Inc. (EMSI), which helped to develop a definition of an MET. EMSI used information derived from existing profiles for industrial machinery mechanics, machinists, and electrical and electronic repairers of commercial and industrial equipment, and built a profile that includes mechanical, engineering, electronics, and information technology knowledge; troubleshooting, installation, repairing, and complex problem-solving skills; and abilities to visualize, communicate orally and in written form, and reason in complex situations. We think that this definition has really hit the nail on the head and are now in the process of validating the definition with industry experts.

In the process, one of our colleagues in Colorado noticed that the knowledge, skills, and abilities seemed to have a lot of similarities with other occupations—careers related to industrial maintenance, renewable energy, industrial operations technology, water quality management, and environmental engineering. We agreed and had EMSI compare the competencies of METs with more than 25 careers in these other industries.

What we found verified our gut feeling. The competencies of virtually every occupation were at least 80% compatible with the competencies of an MET.

Why is Mechatronics so Important?

We believe these findings are very significant for a number of reasons.

• First, the training for METs has a very high degree of skill compatibility to a large and expanding pool of occupations in various fields (including green). This is very encouraging given the need to retrain and advise incumbents, dislocated workers, and new workers about solid job opportunities in tough economic times.

• Second, the overlap of skills means that the curricula developed in our education and training could be used in multiple career paths and to support a wide range of occupations related to manufacturing industries. This means more career mobility for the trainees as they complete training.

• Finally, because these data help educational programs address multiple career paths at the same time, workforce and education professionals can be much more sophisticated about how we talk with the users and potential users of education and training so that programs and skills are tweaked to meet the specific needs of regional industry.

With the help of EMSI, we have been able to add substantial depth to the work that we are doing in mechatronics. Our new understanding will allow us to use significant parts of the curriculum that we put into place over the last several years to develop new career paths leading to “gold-collar” jobs in our regional economy.

Illustration: Mechatronics Techs and Renewable Energy

To illustrate the value of a mechatronics tech’s skill level, the graphic provides a skills comparison between mechatronics techs (the colored bars) and a group of potential renewable energy occupations (HVAC, electricians, construction managers). For the most part the skills areas are highly compatible. The largest gaps mainly seem to be in the soft areas (management, customer service, oral and written expression), which would probably relate to the business aspect of the occupations. A large gap in the building and construction area makes sense.

For more information, email Scott Sheely or call him at 717-735-0333.

Click here for a PDF version of this piece.

Illustration by Mark Beauchamp

Introduction

Over the past year, EMSI has been fielding questions from local planners (workforce boards, community colleges, and economic developers) on how to look at green jobs, particularly at the regional level. To respond, we’ve been doing our best to link labor market information (LMI) to potential green sectors (e.g., renewable energy, energy efficiency, green construction, etc.) so people can gain an understanding of trends, earnings, education levels, and even things like skills associated with “green occupation clusters” in their own economies. In doing so, we have made three general observations:

1. Many of these jobs are going to fall within the construction and manufacturing sectors (e.g., welders, roofers, HVAC installers, etc.),
2. Based on a lack of understanding, concrete information, and large scale demand, “green jobs” can be a very difficult development mission for local planners, and
3. It is vital to speak “from the data” as much as possible for the basic reason that if plans are being made on tenuous assumptions that cannot be supported, real people’s lives, careers, and families could be harmed.

Our purpose in this piece is to examine these observations at a little more length—especially with regard to regional economic and workforce development. So let’s start with a little frame of reference. In an earlier piece we mentioned that much of the thought behind green jobs has sprung from groups like the Center for American Progress, which have been integral in getting these policies pushed to the forefront. To illustrate, last year the Center’s CEO, John Podesta, wrote (in reference to the recession),

At the same time, we face a growing climate crisis that will require us to rapidly invest in new energy infrastructure, cleaner sources of power, and more efficient use of electricity and fuels in order to cut global warming pollution. There is much work to be done in building smart solutions at a scale and speed that is bold    enough to meet this gathering challenge.

It is time for a new vision for the economic revitalization of the nation and a restoration of American leadership in the world. We must seize this precious opportunity to mobilize the country and the international community toward a brighter, more prosperous future. At the heart of this opportunity is clean energy, remaking the vast energy systems that power the nation and the world. We must fundamentally change the way we produce and consume energy and dramatically reduce our dependence on oil. The economic opportunities provided by such a transformation are vast, not to mention the national security benefits of reducing oil dependence and the pressing need to fight global warming. The time for action is now.

This “requirement to invest” in cleaner energy to “cut global warming pollution” rests on an assumption that global warming represents an imminent threat—meaning that nothing should preempt a rapid, decisive response. The actual “investment” in clean energy and things like training are going to be made largely by the federal government via tax dollars collected from American businesses/taxpayers.

Now given the recession, job loss, and our nation’s otherwise dismal financial condition, many are questioning the continued emphasis on things like green jobs, climate change, and cap-and-trade legislation. In recent months we have seen a sizable push back against some of this policy. For instance, certain industry sectors (e.g., agriculture) have voiced economic concerns about “going green.” According to Green Inc., a New York Times blog on energy and environmental issues, the American Farm Bureau issued a memo that says:

Climate change bills in both the Senate and the House will impact our farmers and ranchers, hit America’s consumers and impair the economy of our nation. For farmers and ranchers, it will mean higher fuel and fertilizer costs, which puts us at a competitive disadvantage in international markets with other countries that do not have similar carbon emission restrictions. For the future prosperity of the U.S. economy and American agriculture, climate change legislation must be defeated by Congress.

At its core, the memo indicates a growing concern that new cap-and-trade legislation would have significant adverse impacts on the agricultural economy and, as a direct result, on many rural communities, heavily dependent on agriculture for their livelihood.

In addition, some local workforce/education professionals in charge of industry-oriented training programs that support areas like manufacturing have their own set of concerns about green initiatives. Our example, which comes from Inside Higher Ed, makes the following statement:

As the Obama administration talks up its “green jobs” initiatives, some leaders in workforce development are concerned that more traditional skill trades within the manufacturing and construction fields are being deemphasized by community colleges looking for federal dollars to support newfangled programs.

Among those worried are advocacy groups like the American Welding Society.

“The American Welding Society gets concerned when we see Congress act, as it did this year, to discontinue funding for proven programs like the National Science Foundation’s Advanced Technical Training programs in favor of brand new ‘green jobs’ education,” said Ross Hancock, the group’s spokesman, noting that the vote to discontinue has only passed the House so far. “That’s because, right now, there is a shortage of skilled welders in this country, with welders retiring twice as fast as new ones enter the workforce. This trend is having a critical effect on our ability to compete in both ‘green’ and traditional industries.”

Our general observation here is that there is a certain level of tension between “national policies” and what can be thought of as “regional interests.” This tension seems to arise from how a national policy initiative would or could impinge on the economic interests of a region. This sort of thing doesn’t seem all that uncommon—regional development interests often find themselves at odds with national policy initiatives based on issues like economics, job creation, and local beliefs and values.

A third and final example that typifies the tension between green development and economic concerns comes from a Gallup poll, which indicates that the recession has dried up some of the support for increased environmental regulation. According to Gallup’s Editor and Chief, Frank Newport,

Right now, Americans are more concerned about the economy than the environment…The politician who says, ‘I’m going to cripple jobs and shut down factories’ would be in trouble in this economy.

The poll supports the notion that economic growth and environmental protection are not mutually exclusive. In recent decades, the United States, which is home to the world’s foremost “capitalistic” thinkers, has certainly become a great champion of environmental issues. After all, the US is home to some of the most advanced environmental regulation (Clean Water Act, Clean Air Act, RCRA, Endangered Species Act, etc.), as well as countless national and community-based organizations that emphasize protection, stewardship, and conservation of the environment. Furthermore, huge, multi-national corporations (like GE, Apple, and IBM) never fail to mention something about how their company cares about the environment and makes “Product X” using only the most environmentally responsible practices/materials.

However, since the recession started, there has been a tangible push back against increased environmental regulation. Above all, this seems to be indicating that our ability to be environmentally conscious stems from our overall economic stability. Economics and environmental regulation need to find a way to exist harmoniously. If one makes the other unstable, they both will eventually become unsustainable. Destroying the environment will ultimately kill economic development. Over-regulation also will ultimately kill economic growth and development. If you have no economy at all, you will have no money to support environmental interests.

So we find ourselves at a crossroads between two competing points of view—one that thinks that we need to restore economic stability before we deal with environmental issues, and one that believes that if we don’t address environmental concerns right now, we are forfeiting our future. With these things in mind, we want to delve into three areas which (at least in our minds) illustrate why local interests are sometimes at odds with green development.

Note: If you have found that “green” has really helped your local development efforts, please let us know how and why. It would be a great encouragement to others who are feeling their way through this new and expanding area.

*Click below for the remaining sections of the op-ed:

First Observation

Second Observation

Third Observation and Final Remark

To make it simple and because there is so much data out there to consider, let us suggest two major data components that ought to play a key role in program evaluation and planning. First, data on the occupations that a specific program trains for gives a college or university a solid framework to evaluate how well it’s staying in touch with local, regional, state, and national demand for that occupation. Second, data on the current availability of those training programs allows educators to see whether anyone else in the region already offers training for those occupations. Looking at occupational data seems too obvious to mention, but seeing it next to data on the actual training programs in the region offers an essential perspective on the program’s viability.

To demonstrate how an analysis like this might work, we’ll look at Larimer County, Colorado.

Let’s say that a college in Larimer County has identified Computer Support Specialists as an occupation it would like to evaluate. Initially we’ll want to look at the occupational data. Historical data from the region looks like this:

The occupation shows a growth of 47 jobs over the period. However, we also show a strong number of replacement jobs over the period. Replacement jobs are openings that come about due to attrition within the industry. By looking at both of these numbers together, over the 2006-2009 period we see there are 51 average annual openings. This number ensures that we’ll be looking at an apples-to-apples comparison when we bring in the program data for the region.

In this instance, the area colleges have produced zero graduates in the programs that train for this occupation—good news for the school interested in serving the occupation.

Next we’ll pull information on an occupation (Dental Hygienists) that does have training in the region and go a little more in depth on the programs that train for it. In Larimer County the historical data looks like this:

Because those replacement jobs figures are so low, we get an annual openings figure of 27. As we turn to the program data to see how the region will handle these openings we find that in 2008, area colleges produced 35 graduates in programs related to these occupations. So, at first glance, the need for this occupation is already being met by the existing training in the region—and actually creating a surplus of eight grads. However, let’s dig deeper into the program data and look at the award level.

The IPEDS information we’re using to measure the number of completers in the region indicates seven possible award levels: Awards of Less Than 2 years, Associate’s, Bachelor’s, Postbaccalaureate Certificate, Master’s, Doctor’s, and Professional. All of the awards in the region are at a Bachelor’s degree level, which doesn’t necessarily indicate a training need.

Next we’ll look to see the actual programs that train for the occupation:

This data shows us that all the registered completions for Dental Hygienists are actually completions in a more general degree, Health Services. While there might be some workers completing a degree in this program and then becoming Dental Hygienists, chances are good that this more general degree does not feed directly into the occupation.

This raises another important issue; even if we assume that some of the annual openings are filled by the Health Services completers, it’s still very likely that a graduate from a program focused on Dental Hygiene would be a much more competitive degree. Completers of that program would require less on the job training and orientation, making them more desirable for employers.

Viewing the program completer data like this helps to orient workforce training efforts, and to understand the viability of a given program in the region. However, there’s one final step—verifying on the ground that this program will succeed. This requires getting in touch with employers in the region. By looking at an inverse staffing pattern on the Dental Hygienist occupation in EMSI’s Economic Forecaster module we can find the industries that staff those workers.

Using this NAICS code we can pull the top businesses in the region—also in Economic Forecaster—under that code and find the employers it would make the most sense to contact. For this scenario the data looks like this:

Now we’ve essentially pulled back a list of employers we could contact to confirm the connection between our potential program and workforce demand.

Of course, evaluating any program in any region is going require its own tweaking of this process. If you’d like help performing this kind of program evaluation for your region, contact Josh Stevenson or call 866.999.3674.

This paper also builds on our previous four papers on the subject of green jobs, which you can review here.

Contact Information
Rob Sentz (rob@economicmodeling.com)
208.883.3500

For a PDF of Green Jobs, Part 5 click here

Introduction: What is a green job?

With so much talk about green jobs, you would expect an abundance of available jobs and training for jobseekers to pursue. However, because the green movement is still young and green jobs lack the well-established economic characteristics and relationships found within traditional industry sectors (retail, manufacturing, finance, etc.) training programs, classifications, and actual job descriptions are either not really in place or are perhaps a bit vague and not connected to a job market that is ready to hire. As a result, there is some confusion about green jobs by planners and jobseekers. In a recent article Pamela Murray, Portland Community College’s dean of workforce, economic, and community development, talked about how the job market (green or otherwise) is perhaps not ready for the many jobseekers that need employment now.

” ‘While we are still training people, the job market isn’t going to be able to support them necessarily when they come out . . . Manufacturing and renewable energy are other areas in which demand for jobs probably will increase, but that may not help you if you are going to be graduating in June,’ she said.”

The article continues:

” ‘There is buzz around green jobs such as wind technician and energy analyst, but for the most part the jobs aren’t there yet. . . Our big concern is, when these people are done with training, will the jobs be there,’ she said.”

A lot of this has to do with the recession and the fact that the green movement is, in many ways, currently being propped up by government programs that have been rapidly developed and deployed and haven’t really manifested themselves in the real world.

So what can career centers, colleges, or other agencies do to help local jobseekers? In order to provide the best possible advice it is important to understand and communicate what is actually known about green jobs and how this sector is going to (or might) manifest itself in the real world and particularly on a regional level.

The goal of this paper is therefore to provide information that local planners can use to better understand green jobs, how they can think about preparing workers for these jobs, and how this movement might play out in the local economy. We will break the discussion down into two parts. Chapter one will focus on the big picture of how to understand and look at green jobs and Chapter two serves more as a guidebook to how local practitioners can develop their own analysis. To conclude the paper we have a quick discussion on how and why entrepreneurs are going to be so important to this movement.

Read Chapter one here

Read Chapter two here

Read the conclusion here

Last month we considered regional investments that would create jobs (green or otherwise) on the basis of multiplier effects, long-term vs. short-term effects, and the relative cost per job created. To review this article, click here. This month we want to turn our attention to understanding infrastructure projects, and how we can evaluate them based on a regional cost/benefit analysis.  In this discussion we will be reviewing and applying the concepts of input-output, economic impact, and fiscal impact.

Contact information: Rob Sentz (rob@economicmodeling.com)
208.883.3500

For a PDF version of the data spotlight: Green Jobs Part 4

1. Review & Introduction
In a previous article we concluded that, given our current economic troubles, it would be best to focus on investments and projects that foster long-term job creation as opposed to construction or infrastructure projects, whose benefits are often limited to quick bursts of low-skilled, short-term employment. As a result, we looked at how to apply green or stimulus package spending to create better local industry opportunities.

In this issue we will return to the topic of infrastructure projects, realizing that the economic development of many regions is constrained by things like poor roads, railways, ports, and other out-of-date, inefficient systems. The American Recovery and Reinvestment Act includes a lot of money and provisions (roughly $90-$100 billion) for infrastructure improvements, and if you recall from our first article, many green projects (and their resultant occupations) are related to infrastructure improvements.

So in this article we provide a review of how to assess which infrastructure project will have the best regional impact. As always, if you need help identifying the impacts of a project please, contact us.

2. Economic Impact Basics
Whether green or not, how do we measure the impact of infrastructure projects? First, we need to define three terms that will help us properly assess infrastructure projects.

Input-Output (IO) Models
Households, businesses, and governments are intertwined in a complex web of interdependent relationships based on (1) producing, (2) selling, and (3) purchasing goods and services. As a result, an activity in one part of the economy will have far reaching affects on other parts – just like the effect that a drop of water has when it falls into the bucket of water. A primary tool used to measure and explain these relationships is the input-output (IO) model. Input-output models, therefore, indicate how a change in one part of the economy will ultimately affect other parts based on these purchasing and selling relationships.

In addition, we have put together a practical guide to input-output modeling, which is a compilation of various materials we have produced over the past few years. In this guidebook we review many regional development topics, data sources, and techniques which should be helpful in local planning and decision-making.

Economic Base
There are many ways to understand this concept. Perhaps the simplest is that economic base is a description of the industries or other income sources that bring money into a region (rather than merely circulating money already present). The two important concepts that underpin economic base theory are that of “basic” and “non-basic” industry.  Basic industries are those which depend on income from outside the region, thus bringing money into the region. Non-basic industries are those which generally sell to residents or businesses already in the region. Economic development theory emphasizes the importance of basic industries as the “pillars” of a region’s economy, having much more importance than non-basic industries, which are generally assumed to naturally follow basic industries. Note that many industries are partially basic and partially non-basic.

For more on economic base click here.

Fiscal impact modeling
Fiscal impact analysis is an estimation of the impact of a given project (e.g. a new road) or direct economic change (e.g. layoffs) on public sector revenues and expenditures. The “direct economic change” might be a short-term construction or other new infrastructure project; it might be a new factory, a regional investment in human capital, or a campaign to attract new business and bring about economic transformation.  A short- and long-term analysis of regional job and income effects will normally accompany the fiscal impact study.

For more on fiscal impact modeling please contact us.

3. Reviewing the Projects
With these things in mind, let us assess three development projects. In a previous article we told the story of a mayor whose town had just lost a lot of manufacturing jobs. We looked at how to spend federal dollars, aimed at creating green jobs, on retrofitting a manufacturing facility and building a new training facility for a new industry.

This time let’s tell a different story from the perspective of a county executive in a rural area. The state has received its share of the “stimulus package” and the governor is looking to allocate the money in several primary areas.

• First, the state is suffering as the result of deferred maintenance on rural roads. Poor roads have led to a decreased amount of commerce going through the state. As a result, the governor would like county executives and the department of transportation to submit road improvement projects to fix this problem.
• Next, because of increased global demand for agricultural products produced in the state there is a need to improve some of the short line railroads. This would reduce transportation costs and improve the environment (in terms of reduced energy consumption).
• Finally, because many rural communities are undergoing a transformation from agriculture to more home-based sole proprietorships there is an increased demand and need for better broadband services.

The three projects will generate measurable economic benefits.  Note, however, that although none of them are “green” per se, they all qualify for funding under the American Recovery and Reinvestment Act and thus could actually employ individuals from “green” occupations. The important thing to note is that once this money hits the local level the dialogue is less focused on the “green” and more focused on the specifics of the regional economy, workforce, labor market needs, and overall impacts.

The next step is to analyze these projects to learn what their impact would be on the area, and if we can, determine which of the three will have the largest impact. In each case we are using EMSI’s Economic Impact module, which is a web-based input-output model that can be used for any region (county, ZIP) in the nation.

4. Three Scenarios

Scenario 1 – State Highway Construction
The impact of road improvements can be a little difficult to judge. However, the importance of having good roads should not be understated. In a September 2008 article David Brandon of Site Selection Group LLC, stated that highway accessibility was the No. 1 factor cited by corporate location decision-makers for where new companies decide to locate. Here is a helpful excerpt from the article that states the overall importance of good roadways:

“Few aspects of an area’s competitiveness are more fundamental than its infrastructure systems, and no other infrastructure system exerts a more elemental influence on a facility’s location than the complex of highways that will serve it . . . While corporate decision-makers, economic developers, and site selection consultants often overtly concentrate on seemingly sexier location decision factors, highway accessibility is never out of mind. Whether it delivers workers, materials, services, goods, or emergency vehicles — or provides entry to markets and customers — an area’s highway system is basic to business operations. Further, the efficiency of that highway system enables informed decisions as to which modes of transport will best achieve a company’s time-to-market objectives. Although highway systems are among the least elastic and most expensive and time-consuming to construct, they are also among the most effective at stimulating new investment.”

With this in mind we turn our attention to this area’s largest road construction need. Last year 25 miles of a 30-mile section of road running between our town and the next was widened from two lanes to four lanes. The remaining 5 miles meanders through a section of the county with several housing developments. The residents in those communities are not thrilled about the prospects of widening the road, and dislike the amount of heavy traffic (including trucking) that rolls by their front doors. As a result the city would like to create a new 5-mile bypass. The reason for this is that most of the accidents on this 30-mile stretch occur in the 5-mile section near the housing development. In addition, once this section is complete, the new bypass will become part of the preferred route between the state’s capitol all the way to a resort town 85 miles north. Therefore, improvements to this local road could create more efficient and safer travel for local commuters and a more appealing route for long-distance travelers, and a crucial artery for companies that ship by highway. Preliminary estimates report that a completed four-lane highway connecting all these cities would increase commerce by 20%.

To establish this 5-mile section would require $50 million dollars. With the aid of EMSI’s Economic Impact module, we determined that roughly 50 construction jobs would be added to the 80 currently employed in this industry (in the two-county region). In addition to these “direct job impacts,” we determined that road construction in this region has a multiplier of 1.58 – so for every job created another .58 jobs are created in other industries. As a result, the total job creation could be 79 jobs. These jobs would add $3 million in income to the two-county region. However, because construction projects have short term job impacts, these jobs could be lost after the construction phase.  What will remain is the increased commerce flow through the community, and more business for gas stations, convenience stores, restaurants, and other recreational industries.

What makes this project green?
An initial observation might suggest that these jobs are not green in any traditional sense. However, the project can rather easily be described as having a number of green outcomes. For instance, environmental engineers would need to be hired for run-off water abatement, and others could be hired to make sure the surrounding region still maintains a high degree of environmental quality post construction. These are green jobs plain and simple. Beyond this, new roads are in many ways more environmentally friendly than older ones. While they handle more traffic, they also help save travel time and fuel, help cars run more efficiently, and reduce wear and tear. Altogether then, there is much about highway construction that can be characterized as green.

Scenario 2 – Railroads
The second project considered is the need for improved freight and short-rail transportation to help local farmers transport their wheat harvests more efficiently to the nearest grain elevator. After years of retrenchment by the local railroads, which have to compete with highways and federally-maintained waterways, our county currently has no rail transportation. With the price of wheat going up, and the worldwide demand increasing, local farmers have been asking for this improvement.

Using EMSI’s Economic Impact module, we determined that agriculture makes up 8% of the two-county area’s workforce and accounts for 10% of the region’s total earnings. It creates $77 million in earnings and $377 million in sales. Since the price of wheat has increased many farmers have improved their practices and purchased new equipment to keep up with demand.

Transportation costs for agriculture run roughly from .8% to 1.5% of final market price demand. As a result, local farmers spend roughly $4.5 million on freight transport to move their wheat to market. Each of the region’s 250 farms spend an average of $18,000 per year on transporting wheat to the grain elevators at the inland port located 30 miles away, where it is then barged downriver to various coastal ports for overseas export. But if they could truck their wheat to town and then have it transported to the coastal ports by rail, they could each save 50% in transportation costs. Overall the farmers would retain an extra $9,000 per farmer and $2.25 million would be kept in the regional economy for other uses.

In our case the rail right-of-way already exists. They are just abandoned or downgraded and need to be rebuilt or improved. It will cost $15 million to rehabilitate the short line and invest in an operator to once again run grain trains to mainline railroad connections. Initial estimates indicate that if the line were rebuilt 5 railroad jobs would be added. The local jobs multiplier for this industry is 2.31, so 12 jobs would be added as a result of this project.

The job impact associated with this re-development work results in a $6.15 million increase in regional earnings.

What makes this project green?
One of the primary reasons most frequently given for short-line railroad improvements is that it takes burdens off the local road infrastructure. It’s an overall better long-term investment because railroad maintenance gives you more ton-miles per dollar. This is why there are still rail lines in many areas of the country. In addition, a big point to pay attention to here is how emissions from transportation would be reduced by a factor of two because rail transport has much lower emissions as compared to trucking.  So railroads can help to create less road traffic, which leads to less wear and tear, and lower emissions. These are all attributes of a green project.

Scenario 3 – Broadband
Finally, the local economic development council has been trying to attract more companies to the local technology park. There are currently three companies in the tech park, with one more that has expressed interest in moving to the region. The company that has expressed interest is classified under Physical, engineering, and biological research. This company’s major concern is its need for better telecommunications capabilities, specifically fiber optics.

With the help of EMSI’s Economic Impact module, we know there are currently three other companies, one with 20 computer chip designers, another with 60 software developers, and finally 50 at a testing laboratory. If the new company were to locate in the county it could produce and additional 15 jobs and $1 million in earnings and help create another 8 jobs in the economy.

The cost to add fiber optics will be roughly $1.5 million dollars. The companies could see efficiency increase up to 20% with better telecommunications capabilities.

What makes this project green?
The green quality of this project can be seen in the fact that technology companies are naturally a lot “cleaner” than many other industry areas. As the town does things to encourage this sort of business development, it is also encouraging the sort of companies that produce much waste or consume as many goods (e.g. paper products and electricity will be the primary local inputs).

Results and Analysis
The following tables help us break down all of the costs and benefits associated with these projects. We will score the projects based on job creation, multiplier effects, costs, environmental impacts, economic impacts, fiscal impacts, construction phases, infrastructure lifespan, and other considerations.

(Click for full-sized images)

Road Improvement Results:

• At $50 million the road construction project is by far the biggest and most expensive project.
• The possibility for short- and long-term job creation is at its highest at 79 and 300 jobs respectively.
• The wages directly associated with this project are much lower than the other two. These jobs are associated with things like gas stations and restaurants, which includes a lot of part time workers and lower wage positions. In addition, the wages are lower than the cost of living for the area.
• The cost to create the short term construction jobs is roughly $1 million per job.
• A big point to note is that this project has the potential for a net negative fiscal impact of $250 thousand per year.
• The life span of the road is between 12 and 13 years.
• Road improvement will have the largest impact on the retail trade sector, which has the lowest associated earnings and multiplier effects. Recall from above, we reviewed the concept of basic and non-basic industries. Retail trade, for the most part, is a non-basic industry, which means that it tends to circulate money that is already within the economy.

Conclusion – Road Construction

Road construction is difficult to compare to other projects. While a good road system contributes to regional economic development, they require significant upkeep and maintenance expenditures (e.g. snow removal, fixing potholes, dealing with safety issues, etc.). As a result, while the road project could actually have the largest jobs impact it could also have a net negative fiscal impact on the region and a slightly negative environmental impact based on runoff and increased traffic. However, good road infrastructure begets economic development.

If we are just simply comparing the three projects, road construction has the smallest impact on the basic industries (industries that bring money into the region), and does not add or contribute high wage employment to the region. The biggest issue to consider is the need for the state to have better road systems, which provides many intangible elements that are necessarily difficult to analyze in a purely local context. In addition, new roads tend to be safer, better to drive on, save travel time, and enhance the overall quality of life for the area’s residents and businesses.

Short-Line Railroad Results: 

• The $15 million associated with repairing the short-line rail road falls between the two projects.
• The possibility for short- and long-term job creation is low compared to the other two at 7 and 25 jobs respectively.
• The wages directly associated with this project are higher than the other two.
• The cost to create these jobs is much higher at $3 million per job.
• The largest impact that will be felt is a significant reduction in costs for agriculture.
• Another big point to note is the net positive fiscal impact of $210,000 per year.
• At 30 years, the life span of the railroad is much longer than the other two projects.
• Railroad improvement will also have a net positive environmental impact based on the fact that emissions from trucking will be decreased by as much as 50%.
• Of particular note is the $9,000 savings that local farmers will experience. This will help keep an additional $2 million in the community.

Conclusion – Railroad

While railroad infrastructure improvements have the smallest job impact, the fiscal impact is positive, and the savings that local farmers would experience is significant. Remember, agriculture drives a considerable portion of the economy and any efficiency created here will tend to have positive spillover effects in the region. Though not as pronounced as with road infrastructure, the presence of a viable railroad can be very attractive to site selectors. Creating more efficient basic industries will drive and keep more money in the local economy, which has it’s own way of creating additional jobs and a more prosperous region. In addition, of the three projects, this is the only one with a net positive environmental impact.

Broadband Results:

1. The cost to install broadband is much lower than the other two projects.
2. The possibility for job creation and for increased business efficiency falls between the two other projects.
3. We gave this project a slight negative score for environmental impacts. This is mostly due to the fact that some excavation would have to occur, which could contribute to runoff. Overall the environmental impact of this work is minimal.
4. Construction-phase job creation would be very minimal and short term (only lasting 4 months). The big thing to note is the potential for long-term job creation as a result of new companies growing and expanding in the technology park (26 jobs).
5. Most impressive is the fiscal impact associated with this project ($300K per year).
6. The wages associated with this project are also above the average cost of living for this community.

Conclusion – Broadband

If the county wants to develop the technology sector and attract and grow industries, broadband is a basic necessity. Another factor to consider is that in rural areas there are a lot of sole-proprietors and home-based businesses. This sort of development could really help out these business owners. The primary costs associated with this development are not necessarily the construction. Many communities place additional tax burdens on the use of such infrastructure, and the county should do a feasibility study to discern how many people would use this service and how much they would be willing to pay. If it is installed and nobody uses or benefits from it than it is a net loss.

Conclusions:

Each project has big upsides offset by several downsides:

• A new highway will contribute the largest number of jobs, but will have a negative fiscal impact.
• Railroads will not contribute many jobs to the region, but could create significant improvements for area farmers, and help reduce emissions. It has a positive fiscal impact.
• Broadband has the largest fiscal impact and the ability to contribute to and broaden the community’s economic base, but it will take additional work to actually attract business to the area (e.g. just putting broadband in the ground could be a net loss if there are not enough businesses and households using it).

When states and regions receive investments for improving their infrastructure a basic analysis such as this will help them understand which project will have the best impact. Also, a big thing that communities need to determine is what sort of development they prize the most. (1) Some communities might really want improved roads for improved commerce, while others would prefer to stay small or isolated. (2) Some communities might value better technologies, while others feel like those sort of high-tech ventures are not the best fit at the moment. (3) Still other communities might want to maintain a focus on agriculture, while others need to consider moving the economy’s economic base toward growing and more stable industry sectors.

These factors can be quite complicated and a thorough review of regional economic trends, demographics, labor markets, and other market forces is highly advisable before decisions are made. For further reading please check out our Input-Output Guidebook, which will take you through many of the topics and definitions provided in this paper.

Finally, in light of green jobs it is important to remember that many of the projects being characterized as “green” are closely associated with infrastructure projects. From our previous examples the road project most likely could not be characterized as green. However, there are aspects to the other two that could be characterized as green as well. For instance, a significant reduction in emissions, and the desire to see more rail transportation could raise the green status of this project. In addition, while broadband is not green, the high-tech building projects that result from this investment could be green.  For more about green jobs please consult our previous articles and Green Jobs Part 3 – Green Pathways.

To ask questions or conduct such analysis for your region, please contact us.

By: M. Henry Robison, Founder and Senior Economist, EMSI

contact information: Rob Sentz (rob@economicmodeling.com)

For a PDF version of the paper: IO guidebook

Introduction

Our nation’s economic woes have led to many ideas for the best way to transform our economy and get it back on track. Many of these ideas are rooted in “Keynesian” economic theory, which advocates for monetary and fiscal policy responses by the government to stabilize and control the business cycle. The most significant instance of this is the current American Recovery and Reinvestment Act (aka the “stimulus package”), which aims to spend unprecedented amounts of money on everything from infrastructure to health care to educational programs in order to create demand and spur stagnant markets. There is much debate over the true effectiveness of this sort of intervention, which is beyond the scope of this paper. For now we want to provide a practical guide to make sure local planners know how to evaluate projects and programs based on their importance to the region and especially on their potential return on investment. Because of the sheer enormity and pervasive nature of the spending, the federal government would like to see a high level of accountability for organizations, institutions, and programs that will be receiving this money.

A primary tool for this accountability and evaluating where spending might produce the greatest regional benefit is the input-output (IO) model. This tool is often misunderstood and misused. However, if approached and applied correctly, IO can be a very powerful and helpful tool for informing decisions—allowing planners to determine where dollars will have their highest economic and workforce impacts.

In this paper we aim to provide an overview of IO for non-economists, provide some useful illustrations and definitions, and serve as a basic orientation for local, state, federal planners so they can take advantage of this resource. While some of the material is applicable to many economic models, we focus on the capabilities of EMSI’s Economic Impact model.

If you have more questions about using IO modeling for your region, or would like special assistance please feel free to contact us.

Hank Robison

About the author

Dr. Henry Robison is a senior economist and co-principal of Economic Modeling Specialists Inc. (EMSI). He has over 20 years of experience and a significant publications record in regional economic impact modeling and analysis. He is recognized for theoretical work blending regional input-output and spatial trade theory, and for development of community-level input-output modeling and analysis. He served 10 years as faculty member and consultant to the University of Idaho, where he secured a wide array of grants and contract research.

Dr. Robison’s major EMSI consulting projects include design of the Utah Multiregional Input-Output (UMRIO) Model; work in partnership with Rutgers and Princeton University for the U.S. Department of Commerce Economic Development Administration (EDA) to assess the effectiveness of EDA regional economic development grants; partner with New Jersey Institute of Technology and Rutgers University to develop the Federal Highway Administration’s TELUS transportation project impact model; and extensive work with the U.S. Forest Service in ten western states on measuring the economic impacts of federal land management planning. He is also currently working on a project to develop regional labor market analysis for the Middle East and North Africa.

A retrospective published in the journal of the Regional Science Association International listed Dr. Robison number eighteen on a list of the top one hundred “intellectual leaders of regional science” for the decade of the nineties (Papers in Regional Science, 83(1), 2004).

Table of Contents

I. Regional Economics 101

II. Practical Applications of IO

III. Understanding Multipliers

IV. Avoiding Impact Modeling Pitfalls

V. Using Input-Output for Economic Development Analysis

VI. Defining Appropriate Regions

To read Green Pathways (PDF): EMSI green jobs part 3 data spotlight

Summary

At the local level, the discussion of green jobs should be rooted in data as much as possible. As regions consider major investments in the green economy and workforce and education professionals counsel jobseekers on new opportunities in “green occupations,” it is essential that a data-driven approach is applied to avoid purely anecdotal decisions that could ultimately waste people’s time and money. To this end, in this piece we aim to help local planners understand how to analyze green jobs or the potential for green jobs in their own communities.

Introduction
President Obama and many members of his administration frequently speak of how green jobs will help transform our economy. This is all fine when in you’re in Washington, but how do local economic, workforce, and education practitioners digest, explain, and apply these ideas? Right now, if you stood up at a community meeting or explained to your board that you are going to create green jobs, you would most likely be greeted with blank stares, confused expressions, and generally a frustrated audience. Why is this?

Well first, the concept of green jobs is still rather abstract. In their well publicized book, Made to Stick, Chip and Dan Heath explain how every good idea is simple and concrete. This is a very important point for regional and local planers because the closer you get to real situations, real jobs, and real people, the more you need to be clear, credible, and easy to understand. The concept of green jobs still lacks concreteness and tangible examples. And thus far, a mountain of policy documents and the American Recovery and Reinvestment Act, which few have actually read, are the only things we can use to understand this issue. So how do we even begin to plan, train, and get people ready for this sector without having a strong sense of what green jobs actually are?

For now, the biggest thing that planners can do is look at the occupations and industries that would be affected by the policy and use local analysis to understand the status of these sectors in your community. As regions consider major investments in the green economy, and workforce and education professional counsel jobseekers on new opportunities in “green occupations,” a data-driven approach will help us be simple, concrete, and credible. In addition, such analysis will help people visualize what you are talking about, and help you avoid making well intentioned decisions that could ultimately waste a lot of time and money.

Therefore, a primary goal of this piece is to help you understand how to analyze the green jobs or the potential for green jobs in your own region. To this end, in this piece we will:

1. Differentiate between occupations and job titles
2. Identify specific groupings of green occupations that can be used in regional analysis
3. Present a case study of green pathways analysis to demonstrate how to:

a. Estimate the potential impact of green investments
b. Transition displaced workers in green occupations
c. Connect green occupations with more specific green jobs titles

1. Distinguishing Occupations from Job Titles

Much of the research and analysis around green jobs has tended to focus on green job titles, which are not the same thing as occupation categories. Since our goal is to provide a better definition of what green jobs actually are we need to use occupation categories as much as possible. As a result, it is important to clarify the difference between job titles and occupations.

At this point, most of the focus on green jobs has been around job titles because everyone wants to know the specific work activities required in these professions. The problem is that while job titles can provide good descriptions about specific work activities, there is a tremendous lack of readily available data and standardization for these titles. And while the ability to be more specific about a job’s actual work activities is important, if standardized and secondary data is not available, workers and employers will not have a set of information that they can use to support local decisions.

Occupation Categories

Occupations are broad, well established groupings of workers (e.g. Retail salespersons) defined by the Standard Occupation Classification (SOC) system. Occupation categories are well defined because the Occupational Employment Statistics (OES) program as well as the O*NET program, both run by the Bureau of Labor Statistics (BLS), collect employment, wage, and competency (knowledge, skills, and ability) data for each occupation category. This data form the foundation of
regional forecasts and analysis, and can be applied to any county, ZIP or custom region in the nation (see EMSI’s web-based analysis tools for a more complete illustration). In addition, one occupation will actually be comprised of multiple job titles (Table 1), so occupation categories actually capture the various job titles. The resolution might not be as fine, but the data certainly are a lot better, and will allow local practitioners to generate very detailed and objective analysis of local employment characteristics.

Furthermore, when occupation categories are used we can trace the data back to specific industries through staffing patterns. Staffing patterns allow us to discern which occupations are employed in a given industry. This information is critical when considering things like retraining dislocated workers, or when we need to know what occupations will be required by a company (be it new or existing).

Figure 1 illustrates how we can connect job titles to occupations in order to visualize linkages to other industries and occupations. It also illustrates how new and emerging jobs (such as green jobs) don’t always perfectly overlap with occupation categories. Very often emerging jobs are involved in work activities that require new knowledge, skills, and abilities. Defining these differences and cataloguing these competencies is also important because if these new categories grow and persist in the economy they could be added into the classification system and standardized.

To better understand new competency requirements for green workers, we recommend this case study about the Centers of Excellence of California Community Colleges.

2. Occupations and Green Occupations

Imagine two welders. They both have the same training, the same tools, and the same wages. However, one is “green” and the other is not. In this case the notion of a green occupation is not directly associated with the actual job. Rather, the definition has to do with the specific product or service being produced. To illustrate, let’s say one welder manufactures small parts for boats, and the other manufactures wind turbines. In this case the wind turbine welder is green and the other is not—even though they have identical jobs. In fact, the boat parts manufacturer might actually have a smaller “carbon footprint” relative to materials consumed and pollutants created. These workers could be swapped for one another with little or no training, and as a result, it is not possible at the macro level and according to SOC codes to differentiate between the two identical occupations to determine which one is green. Understood this way, green occupations can be broadly defined as any occupation which has the potential to be engaged in environmentally-friendly work activities or
produce environmentally-friendly products. We therefore recommend that each occupation category be mapped to their corresponding green job titles in order to highlight the specific ways that an occupation can pursue green work activities.

Figure 2: The list comes from the report entitled, “Green Recovery,” (download the pdf) which was produced by the Center for American Progress and PERI.

What are some examples of “green” occupation groups?

So here is the easy way to understand this. Based on the policy directions, groups of occupations will be associated with green projects. One such list is provided in Figure 2. Each project in the list is considered green, and any occupation associated with the project will also be considered green by implication. As more environmentally-friendly technologies and services are developed and defined, we can expect to see more of these “green” project/occupation clusters. But again, the list provided here is nothing more than a list of occupations likely to be associated with the specific project.

3. Scenario: Green Pathways in Building Retrofitting

The following example demonstrates a few of the ways regions can use industry and occupation analysis to understand the region’s potential for creating green economies. This exercise focuses on using the demand for green projects (see Figure 2) as an opportunity to transition dislocated workers into green occupations. Our approach will be composed of the following steps.

1. Model the impact of the potential investment
2. Identify dislocated workers
3. Identify compatible occupations within associated green project area
4. Assess advantages and disadvantages to potential transitions
5. Map occupations to specific green job titles

The region we selected for analysis includes all ZIP codes within a 30-mile radius of Grand Rapids, Michigan (Figure 3).

Figure 3: ZIP codes with a 30-mile radius around Grand Rapids, Michigan

STEP 1: Model Impact of Potential Investment

One of the first questions we should ask is, “What will the total demand for green jobs be in my region?” To answer this we can analyze labor market projections for the green occupation groups. However, projections will not capture the demand for projects resulting from the stimulus package. In order to estimate the potential impact of new investments we must use an input-output model, which will allow us to run “what-if” scenarios to see the impact of the spending.

In this example, we used EMSI’s EI model to simulate the impact of a $10 million dollar investment in building retrofitting. The specific industry we selected was Commercial and institutional building construction (NAICS 236220), because much of the economic stimulus funds in this area are aimed at improvements in government and higher education facilities. Results include the following:

• A $10 million dollar investment in building retrofitting would create a total of 157 jobs
• Eighty-one jobs would be required directly within Commercial and institutional building construction
• An additional 76 jobs would be created in support industries
• The total jobs multiplier for the investment would be 1.93

Multipliers for this kind of investment will differ from region to region. It should also be understood that there are limitations to an input-output model’s ability to estimate the impacts from investments in green projects. The primary reason for this limitation is that green projects may require different inputs (raw materials, equipment, etc.) than traditional projects. These nuances should be considered on a case-by-case basis.

STEP 2: Identify Dislocated Workforce

Now that we have an estimate of the number of jobs that would be created, we can explore what pathways exist for the unemployed workforce. Dislocated workers interested in moving into green occupations can be identified in a number of ways. For example, we could explore transitions for a jobseeker who registers at a local one-stop career center. We could also explore opportunities for groups of workers who have recently been laid off from local employers. For our analysis, we used the most recent labor market information for Grand Rapids to identify the top five occupations that
have experienced the greatest unemployment over the last five years.

These are:
· Aircraft structure, surfaces, rigging and systems assemblers
· Team assemblers
· Stock clerks
· Drywall and ceiling tile installers
· Operating engineers and other construction equipment operators

STEP 3: Identify Compatible Occupations within Selected Green Field

Once the dislocated workforce has been identified, we can explore potential compatible careers in green occupations. The following table displays potential careers in building retrofitting for dislocated workers. In order to be a good candidate career, occupations must have competitive or similar wages and a compatibility index score above 90.

(Click on images to see full-sized viewing)

STEP 4: Assess Advantages and Disadvantages to Potential Transitions

In Step 2 we identified Team assemblers as one of the region’s occupations experiencing the highest level of unemployment. Step 3 allowed us to identify compatible occupations within building retrofitting that could be good targets for dislocated workers. Now we will assess the relative advantages and disadvantages of a specific career for Team assemblers. Our compatibility index has identified that Team assemblers possess knowledge and skills similar to the following building retrofitting occupations:

For this sample analysis, a transition from Team assemblers to Insulation workers will be considered.

Overview of Selected Displaced Occupation: Team Assemblers (SOC 51-2092)

O*NET definition: Work as part of a team having responsibility for assembling an entire product or component of a product. Team assemblers can perform all tasks conducted by the team in the assembly process and rotate through all or most of them rather than being assigned to a specific task on a permanent basis. May participate in making management decisions affecting the work. Team leaders who work as part of the team should be included.

Alternative Job Titles: Assembler, Assembly Line Machine Operator, Assembly Operator, Assembly Line Worker, Assembly Associate, Certified Composites Technician (CCT), Operator Technician, Production Line Worker, Assembly Inspector, Assembly Technician

Industries Hiring Team Assemblers: Direct re-employment opportunities should always be considered before transitioning workers to other occupations. Workers who can find other industries that are hiring for positions in their occupation (as opposed to switching careers altogether) are able to find re-employment faster and usually with minimal retraining.

Employment Summary:

Education, Training & Compentency Summary:

Industries Hiring Team Assemblers: Direct re-employment opportunities should always be considered before transitioning workers to other occupations. Workers who can find other industries that are hiring for positions in their occupation (as opposed to switching careers altogether) are able to find re-employment faster and usually with minimal retraining.

STEP 4: Continued

Competency Comparison

From: Team assemblers

To: Insulation workers, mechanical

The following charts compare the knowledge and skill competencies of these two occupations and facilitate quick identification of competencies for which Team assemblers are over or under qualified. A summary of these competencies can be found on the next page. Note: not all O*NET competency areas are included. Only competencies that are important, very important and extremely important to Insulation workers, mechanical (according to O*NET) are compared.

Competency Comparison Summary

From: Team assemblers

To: Insulation workers, mechanical

The following table displays the competencies where Team assemblers are overqualified, qualified or under qualified when compared to Insulation workers, mechanical. Special attention should be paid to under qualifications, which point out where additional training is needed.

STEP 5: Map Occupations to Specific Green Job Titles

Green Job Opportunities for Insulation Workers, Mechanical

In one sense, Insulation workers can be considered a green occupation because of their involvement in building retrofitting. However, not all building retrofitting is designed to make buildings more energy efficient. In order to explore specific green job opportunities within the general occupational field of Insulation workers, mechanical, we have mapped this occupation to corresponding green job titles published in the Green Job Guidebook.

Insulation Installer

Green Job Guidebook, pg. 28

Description: Responsible for pasting, wiring, taping, or spraying insulation onto a variety of structures and surfaces to exclude or retain heat.

Minimum Educational Requirements: HS Diploma/GED

Experience Needed: Entry level, 1-3 months related experience

Growth Potential: Huge potential as energy efficient technology advances

Employer Type: Private firms

Conclusion

The first rule when analyzing green jobs at a local level should be to take a data-driven approach—whenever possible. While that might seem difficult on the surface, regional analysis becomes much more effective when specific green occupation titles and groupings of green occupations are identified. This allows local and regional planners to avoid working in the abstract and find real answers for their communities. As the Grand Rapids scenario showed, with the right foundation of data in place, estimating the potential impacts of investments and transitioning displaced workers
into green occupations that fit their knowledge and skills competencies becomes a much more straightforward process.

For help conducting similar analysis for your area, please contact us.

About the Data

Industry Data

In order to capture a comprehensive picture of regional industry employment (EMSI Complete Employment), EMSI basically combines unsuppressed covered employment data from Quarterly Census of Employment and Wages (QCEW) produced by the Department of Labor with total employment data in the Regional Economic Information System published by the Bureau of Economic Analysis, augmented with County Business Patterns and Nonemployer Statistics published by the U.S. Census Bureau. Projections are based on the latest available EMSI industry data combined with past trends in each industry and the industry growth rates in national projections (Bureau of Labor Statistics) and state-level projections (individual state agencies).

Unemployment data are based on the Bureau of Labor Statistics’ Local Area Unemployment Statistics program. EMSI also provides a more limited industry and occupation data set, EMSI Covered Employment, which is an unsuppressed version of QCEW.

Occupation Data

EMSI’s occupation data are based on EMSI’s industry data and regional occupational statistics and staffing patterns taken from the Occupational Employment Statistics program (U.S. Bureau of Labor Statistics). Additional wage information is derived from the American Community Survey, and wages are adjusted and interpolated at the county and ZIP code level using EMSI earnings data from relevant industries.

Competency Data

Occupation competency data include numbers that quantify attainment levels and importance levels of various knowledge, skill, and ability categories for over 800 standard occupations. The source is the U.S. Department of Labor’s O*NET database, version 10. EMSI’s occupational compatibility score is based entirely on source. Several assumptions are made in calculating compatibility: (1) The O*NET categories of Knowledge, Skills, and Abilities are sufficient to determine compatibility between occupations; (2) Compatibility decreases exponentially as the difference increases between two occupations’ O*NET scores in one category; and over-qualifications and under-qualifications based on these scores are treated as equally negative.

About EMSI

Products and Services

EMSI provides integrated regional economic and labor market data, web-based analysis tools, datadriven reports, and custom consulting services. EMSI specializes in detailed information about regional economies for assessment and planning purposes, bringing together industry, workforce, economic development, and education/training perspectives. EMSI’s expertise is centered on regional economics, data integration and analysis, programming, and design so that it can provide the best available products and services for regional decision makers. EMSI recently merged with its sister company CCbenefits Inc.—well known for conducting socioeconomic impact studies for over 800 community and technical colleges across the nation—to offer an integrated portfolio of solutions for college, workforce, and economic development professionals.

Clients

EMSI’s diverse client base includes hundreds of colleges, workforce boards, economic development organizations, governmental agencies, economists, consultants, academics, and private-sector analysts. With over four thousand current clients in the U.S., Canada, and the United Kingdom, EMSI’s products and services are critical for strategic decision making and informed regional policy.

Contact EMSI

For more information about EMSI, visit us at www.economicmodeling.com, or call us toll-free at 866.999.3674.

The workforce investment system is in the national spotlight with the emergence of two very big issues: the increasing knowledge and skills gap in the nation’s workforce, and mass layoffs as a result of the current economic turmoil. And because these problems are so pervasive, it is important that local groups join with their region’s leaders to draft strategies around helping workers find and get trained for new employment opportunities.

Our goal here is to

• Provide some practical insight on how local workforce groups can take a data-driven approach to understand and deal with these problems, and
• Offer three good, real-world examples you can use to create similar strategies in your own area.

If you find this information helpful, would like to ask any questions, or need help crafting a strategy for your area, please contact us.

For a PDF version of the white paper: Successful Re-employment Strategies 

I. “Retain and retrain”: an introductory example of information in action

According to the Workforce Investment Act (WIA), one of the objectives for local WIBs is to “analyze workforce information to identify targeted industries and plan for future growth.” That need has been magnified with the recent economic turmoil and growing weakness of the labor market. To  counteract job losses, it is vital for workforce groups to have a strategy for not only helping individual jobseekers but also forming broad strategies to address “big picture” issues involved in mass layoffs. That way, (1) employers don’t have unnecessary labor shortages, (2) displaced workers are moved into more “sustainable” careers, and (3) WIBs become an ever-more valuable asset to their communities.

A prime example of this comes from Lancaster County, Pennsylvania. When news broke that a major confectionery plant was closing its doors—in addition to major cutbacks from four other area plants—the Lancaster County WIB and its partners at the Berks County and South Central WIBs were dealing with a potential loss of 600 jobs, which, given today’s crisis, seems negligible. What we want to do is narrow in on what the WIBs did to retain and retrain the incumbent workers.

1. First, the workforce boards filtered regional industry and occupation data to locate the best opportunities for the displaced manufacturing workers.

Using labor market analysis from EMSI, they quickly identified the top-performing industries in the area sorted by regional concentration (also known as location quotient). Additional research led them to the food processing industry, and specifically packaging technology and radio frequency identification as two industries that were driving the productivity of the region. This simple step cannot be emphasized enough. Far too often, it is easy to get bogged down with a multitude of considerations and competing ideas. In this case rigourously filtering the data to find the best industries helped the group see where they could reasonable focus their attention.

In addition, they again used regional data and analysis to look beyond basic job growth and decline and see replacement jobs  that account for a large number of jobs that need to be filled over the next few years. The data indicated that while the growth in jobs related to technological advances was significant, the projected number of replacements needed was roughly three times that of the basic industry growth. As a result, ample justification was found for targeting this sector and retraining for these positions.

2. After identifying the pivotal economic drivers, the WIBs began to look for ways to train the incumbent workers.

In this case, they discovered that the businesses needed workers with some mechanical/electrical skills, but more importantly were looking for a more multidisciplinary worker, who also had some electronic skills and a little bit of information technology and programming. As a result, the workers would need a little training before they could be employed in the new occupations.

The workforce boards helped the incumbent workers complete a 350-hour certificate program in industrial maintenance and mechatronics, which transfers into credit at a local community college and eventually to a very well-respected four-year program at Purdue University. In addition, a center of excellence has been established in the area that focuses on how to train for high-skilled packaging occupations.

As a result of the planning and coordination of the workforce boards the workers will be qualified to take up careers in the higher-skilled, higher-wage occupations. And furthermore, the companies that comprise the area’s packaging industry will be better off, too. The result is a win-win situation for both the workers, and the industries, and certainly because many of these workers were saved and transitioned into better local opportunities, the regional economy at large benefits.

Summary

• By focusing on two local high-growth technology industries, which complemented the county’s economic base, the displaced workers can find new, higher-paying jobs and employers can draw from a larger base of higher-skilled workers.
• A data-driven approach to strategic planning is a crucial first step for areas in need of economic transformation and revitalization.
• To develop focused, well-coordinated efforts, it is also necessary for local workforce boards, educators, chambers of commerce, and economic development groups to be on the same page. In these cases, labor market figures are often a very persuasive tool.

II. The framework: impact analysis and workforce transition planning

So with this in mind, let’s look at what to do at the local level and how to organize after a mass layoff.

First, the need for good workforce development practices cannot be overstated. With layoffs mounting, a lot of pressure is on the workforce system, and local leaders must work to understand their particular problems and develop locally-based strategies for keeping jobs and workers in the region. Although the federal government can provide funding and aid, the problems involved with mass layoffs are usually best understood and dealt with locally, by people who have a vested interest in the survival of their community.

In the remaining sections we will walk you through some of the steps that practitioners in Ohio, Iowa, and Pennsylvania have taken and illustrate how to use data to understand and deal with mass layoffs.

A. Step 1: Assess the impact

When a layoff is announced, the initial task for local leaders is to take a step back and assess the economic impact. What are the potential ripple effects? What other industries will be affected? What other occupations will be hit hardest? These sorts of questions are important to answer right away.

In Lancaster, confectionery manufacturing had been an important economic driver for many years. Thus, everyone knew that there would be a significant economic impact if the major manufacturers shut down. In this case the workforce boards were able to step in and run a “what-if” scenario using EMSI’s web-based economic impact tool to truly diagnose the real impact of such an event. Such analysis not only offers a true sense of the seriousness of the situation, but it can also allow communities to anticipate side effects of the initial event and even help to capture outside aid for the region.

In the example below we have produced a similar analysis for the loss of 100 jobs in confectionery manufacturing from cacao beans (NAICS 31132) to illustrate how this works. The report gives the total job and earnings change, sales/jobs/earnings multipliers, and the most impacted industries from the loss.

Note the high jobs multiplier (5.1), which means for every job lost in confectionery manufacturing, 4.1 others would be affected in various industries throughout the region’s economy. Thus, a loss of 100 manufacturing jobs means the total loss of 510 jobs in the region (direct, indirect, and induced). In this case the hardest hit areas will be crop and animal production (another 88 jobs will be lost because of the 100 in confectionery manufacturing), local government (15), supermarkets and other grocery stories (11), and full-service restaurants (10). So yes, the plant closure and other cutbacks added up to be a major setback. However, ingenuity on the part of the WIBs kept it from being a long-lasting roadblock.

Click to see a full-sized image of the report.

In cases like this one, the workforce board can act as a sort of regional “doctor” to help the community understand what is going on and how it might affect everyone. These diagnoses are very valuble because they get everyone on the same page, and oriented in the right direction. Only with the proper understanding of the problem can local stakeholders begin to deal with it in the appropriate way.

Summary

• A crucial first step in helping local businesses and workers get back on their feet is processing the right information so you can understand and communicate the likely impacts.
• Without knowing the industries and occupations that would be impacted by a downturn in regional business, planners run the risk of being unfocused—not knowing who to engage and how to help.
• Furthermore, economic impact studies can prove useful even when local workforce boards or economic development groups simply want to ponder “what if” a particular company closed. If a company is thinking about relocating or downsizing, it’s good to know what the potential impact will be before the decision is made.
• Finally, if your region’s economic base (the industries that bring money and jobs into the region rather than just circulating money already present) is actually in decline, it is very important to understand and develop a new direction for the community (i.e. what other industries and jobs could be fostered) before things deteriorate too much.

B. Step 2: A transition plan

After evaluating the impact, the next step is to craft a transition plan. With a mixture of local knowledge, regional data, and compatibility assessments using O*NET data, jobseekers can either be moved into a stronger sector, while keeping their same general occupation, or retrained for different occupations. In addition, this information can even be used to attract new companies to the area based on a strong core of available skilled workers.

The latter example was accomplished in the well-publicized case of Newton, Iowa, where Maytag’s former corporate and manufacturing headquarters were closed. After roughly 1,900 workers were affected by the shutdown, regional leaders attracted at least six advanced manufacturing and high-tech firms. More than 1,200 new jobs have been created as a result.

Let us use another example to illustrate the point. Over the past decade, north central Ohio, like many other regions, has been bombarded by losses in manufacturing. To help, the area was awarded a simple $250,000 planning grant from the DOL.  The grant was awarded in 2007 and since that time local planners have developed a solid strategy to combat the losses. The plans have largely been based on:
1.    Data-driven analysis of the local impacts of the job loss, and
2.    Assessments of compatible sets of occupations.

With this information the region has begun to understand the best way to move dislocated workers into other local employment opportunities, or use this data to attract or expand new industries that might be eager to employ the available skills sets. They are a textbook example of how other areas can turn the loss of a business or lots of jobs into a positive. Follow this link to learn more about the work in Ohio.

One of the key outcomes has been that local leaders now understand that many of the workers displaced by the downturn in automobile manufacturing can move into some of Ohio’s more stable manufacturing sectors. While local auto plants and suppliers have suffered through downsizing and a shortage of orders, there still is demand in various manufacturing sectors due to retirements.

Below is an example of a report, generated by EMSI’s Career Pathways module,  which blends O*NET data with labor market information to indicate the compatibility of occupations based on skills. The table demonstrates the best occupations for Team assemblers in a 9-county region  of north central Ohio to transition into based on job growth, hourly earnings, training needed, and compatibility. The time period is from 2007-2012.

Click below to see a full-sized look at the report.

Team Assemblers are projected to experience what you might expect—fairly significant job decline. But with minimal training, they can move into more stable occupations, albeit ones that don’t show lots of growth on the surface. Nevertheless, when replacement jobs are considered, the data show that plenty of jobs are going to be available. According to Tom Prendergast, director of institutional research at North Central State College in Mansfield, Ohio, “The number of replacement positions from retirees is going to more than offset the jobs being lost in manufacturing.”

As is the case with many transition strategies, it might be necessary for the displaced workers to retrain for different jobs showing high demand in the region. This is why business and WIBs should partner with local educational institutions to analyze the skills necessary for in-demand jobs and design curriculum to get jobseekers trained.

Summary

While there are serious ramifications for a community after a major layoff, workforce boards should work hard to understand the problem and how they can use it to strengthen both the employer and employee communities. Such efforts take ingenuity, planning, patience, and the right mix of regional labor market and O*NET data and analysis. Finally, by analyzing crosswalks between occupations and industries and developing a transition strategy, WIBs and their One-Stops can make sure their area’s labor pool, businesses, and educational centers are working together to bolster the community’s economic base.

Conclusion

Our nation is currently experiencing unprecedented economic problems caused by the triple threat of a shattered housing market, a credit crisis that has shaken financial markets, and most recently extensive job loss. These problems could take quite some time to be resolved, and in the meantime workforce groups can be a big part of the solution—if they employ their local knowledge to understand and serve the needs of workers who need the right skills and good jobs and businesses who need well-trained workers.

One of the workforce system’s best tools for getting things done is regional data and analysis. From dealing with the needs of local businesses to developing training programs to responding to layoffs, many strategic tasks need to be informed by local workforce and economic data. With the poor shape of the economy and labor market, it’s vital to make decisions based on actual figures instead of commonly-held opinions or anecdotes. Whether assisting a single laid-off worker at a One-Stop Center or prepping for a mass layoff in a key local industry, it’s imperative to have a game plan in place. A key part of any response strategy is, first, assessing the impact of a dislocation for your community and then formulating a transition plan to fit the career seekers into high-growth, high-demand occupations, while keeping a focus on economic development and industry recruitment in order to ensure that a stable economic base exists. To accomplish this, data-driven partnerships between WIBs, employer organizations, educational institutions, and economic development groups are essential. With a structure in place, there’s a better chance that businesses’ needs are being met and jobseekers are getting the training they need to be successful. Scott Sheely, the head of the Lancaster County WIB, described it this way: “Part of being aggressive is having good data. Everything we’ve done strategically has been based on data; we’re very data-driven in terms of what business is saying to us and where that will take us.”

For WIBs equipped with the right tools, significant layoffs or even closures don’t have to be devastating. And with an abundance of information and resources available, everyone from rural to urban areas can help drive the productivity of their economy and workforce.

One final word on recent federal efforts to spark economic recovery. There has been much debate over the ability of the Obama administration’s enormous stimulus package to create any lasting economic change or job creation. This spending has been proposed and is being passed so rapidly that local regions and states are still struggling to understand where and how the money is going to be spent. Instead of confusion about this quick infusion of federal dollars, solid strategies need to be implemented. To this end, workforce boards can be very helpful if they band together with their education and business communities, bring regional data to the table, and have some very clear and concrete plans on how they will use the money to counteract unemployment and failing industries and create local, long-term employment opportunities. To read more about how to assess the impacts of projects follow this link, and to see a spending breakdown of the stimulus bill click here.

If you would like more information, need help crafting your own local strategy, or would like to take a closer look at our data and analysis tools to see how you could apply them in your region, please contact us.

Rob Sentz
rob@economicmodeling.com
866.999.3674

About EMSI

Economic Modeling Specialists Inc. (EMSI) is a professional services firm that offers integrated regional data, web-based analysis tools, data-driven reports, and custom consulting services. EMSI has served thousands of workforce, education, economic development, and other policy professionals in the U.S., Canada, and the United Kingdom, and the company’s web-based Strategic Advantage research and analysis suite is used by over 2,500 professionals across the U.S. For more information, call (866) 999-3674 or visit www.economicmodeling.com.

For a PDF version of this data spotlight: Green Jobs Part 2

A Review

In our last article, we talked about the fact that many green jobs cannot be categorized according to actual standard occupation codes (e.g., accountant, mechanic, registered nurse, elementary school teacher). That sort of standardization might happen in the future, but for now we have to define green jobs as those directly tied to the production of green products or services: activities like installing more energy efficient HVAC systems, using new building materials in construction, designing and manufacturing alternative energy technology, or developing mass transit in suburban and urban areas.

These types of projects are likely to see a large amount of funding from the federal government as part of the American Recovery and Reinvestment Act, commonly known as “the stimulus package,” that is currently being debated and amended in Congress. As a result, state and local stakeholders in workforce investment, economic development, and education are scrambling to develop plans for (1) competing for these funds, (2) using them most efficiently, and (3) being highly transparent and accountable for results.

Factoring in the economic crisis and the stimulus package

Just like you, we have been watching the news and following the discussions about this stimulus package. We are also paying a lot of attention to the sorts of things that the Obama administration wants to spend money on, and would like to review what sort of things could potentially have the best local workforce and economic impacts.

Before we get to those, let’s first consider what has happened in recent months and how those events have had some significant ramifications on policy for green jobs. Before the economy took a nosedive, the green movement was building a lot of momentum. Global warming, carbon credits, carbon trading, hybrid cars, LEED, and alternative energy were all grabbing headlines and investments. But the writing of this article comes just after more than 70,000 job cuts were announced by major employers nationwide, in a single day. As a result of our economic crisis, the nation’s attention has changed ever so slightly, and what was once “green jobs” (emphasis on green) has become “green jobs,” or perhaps even just “any jobs.” Accordingly, in this article we are expanding our perspective to include both green and non-green regional development projects. Our point is that similar approaches can be used in evaluating both kinds of projects, even though truly green projects can have additional long-term benefits compared to non-green, all other things being equal.

How can the education, workforce, and economic development communities respond? We believe that it is crucial for local leaders to understand all projects, but especially those claiming to be “green,” based on their real return-on-investment in terms of economic impact, and lasting job creation, and positive state and local government fiscal effect. While this is not the only perspective for evaluating investments, it is a very important and foundational one. We hope to examine more perspectives in future articles.

A Data-Driven Approach to Economic Stimulus Investments

So, with these things in mind we want to review some information to help workforce, education and economic developers use stimulus funds at the local level to actually help those most in need of new employment. We will also demonstrate how you can use regional data and impact analysis to identify and address the questions that are key to your region’s economic health and revitalization.

Here are some of the major issues we consider important to developing a framework for project evaluation:

1. Accountability

It seems that every state and region in the U.S. is expectantly waiting for the federal government to send them a stimulus check. But it won’t be that simple. With some funding likely to take the form of competitive grants, and President Obama requiring rigorous accountability for funds used, areas and organizations will need to be able to bring some solid data to support their project plans and post-project reports. The President has even promised to make this information public on a web site: http://www.recovery.gov.

2. Infrastructure vs. Stimulus

Second, a major emphasis of the current package is infrastructure spending in order to create jobs at the local level. However, not all infrastructure projects are created equal with respect to job creation. While infrastructure is important to the functioning of our economy, we can run into a chicken-and-egg problem: if our states and communities don’t have stable job bases, they can’t use the infrastructure to its capacity and they also won’t be fiscally stable. And if they aren’t fiscally stable, they won’t be able to maintain the infrastructure. In addition, infrastructure improvements often spend more money on capital expenditures than local jobs, and many jobs will be short-lived (see “Short-term vs. long-term effects” below). However, if infrastructure improvements can be convincingly shown to be prerequisite to workforce, education, or industry needs, then they can have great economic benefits. We will discuss this issue further in the next edition.

3. Regional Workforce and Economic Impact Assessments

Having access to and providing solid regional analysis coupled with local workforce and economic impact numbers is key. Being able to show these numbers will help your proposal, but more than that, you need to understand which project will have the largest regional workforce impact. Because of the large number of layoffs a lot of people could be affected by these decisions. Thus, you want to bring the best data and analysis together before you decide. Key measures of any economic stimulus at the regional level include direct job creation, multiplier effects, and cost per job.

Analyzing the Impacts

The economic crisis and stimulus package have brought about a renewed interest in fiscal impact modeling, input/output, and economic impact modeling. In addition, the relatively new art of looking at workforce characteristics is generating a lot of interest and proving to be useful. This has to do with the fact that organizations and areas that would like to get their fair share of the stimulus package and using figures generated by these tools serve as a justification for receiving the federal spending.

To illustrate how you can use these tools to benefit your region we have put together the following hypothetical example. This example was constructed using EMSI’s web-based data tool, Strategic Advantage.

First, let’s imagine we are the mayor of a town that just lost a lot of jobs because of layoffs. Three different groups have put together proposals that they would like the city to submit to bring some of the stimulus money to the area. These proposals are not necessarily exclusive, but we want to evaluate each of them from a basic return-on-investment perspective.

Project 1

The first group wants $300 million to improve the downtown roadways and sidewalks, as well as a new overpass and widening of a nearby stretch of highway. It estimates that it could provide jobs for as many as 500 local workers.

Using an input-output model we discover that highway, street, and bridge construction has a local jobs multiplier of 1.58. So for every job created in construction another half a job is created somewhere else in the region. This means that the addition of 500 construction jobs could potentially spell an additional 292 area jobs. The model tells us that most of the indirect job creation would occur in local government, restaurants, and health care. In addition local or regional concrete mixers, concrete block and brick manufacturers, stone cutters, asphalt pavers, and mining operations stand to benefit. (Notice our regional perspective; more jobs might be created/saved elsewhere in the nation or even overseas due to expanding ripple effects. However, we are focusing on regional benefits.)

Project 2

The second group wants $180 million to retrofit all of the local schools and government offices with more energy efficient HVAC systems. It estimates that it work could create an additional 400 jobs.

You once again run some input-output analysis and discover that non-residential HVAC installation has a local jobs multiplier of 1.8 and that an additional 320 jobs would be created, largely in local government, restaurants, health care, and retail sectors. (We could also look at the money saved by local government annually due to decreased energy costs, but that is beyond the scope of the current paper. And in that case, we would also have to account for the fact that these savings would translate directly into lost sales for the energy sector, possibly balancing out any job-creation benefits.)

Project 3

Finally, a third group, concerned about status of the local construction machinery manufacturing company, would like to figure out a way to provide employment to the 1,000 workers who were recently laid off. First, it indicates that the loss of 1,000 jobs in this sector, which has a jobs multiplier of 2.8, could mean the loss of an additional 1,800 jobs (2,800 total) in the county. To counteract this change the group would like to attract a turbine manufacturing company that could employ as many as 500 workers. It estimates that $28 million would be needed to establish a new learning lab, classrooms, and curriculum at the local community college to train new workers. Also, it would like another $25 million to retrofit some of the vacated manufacturing facilities so that they would be more suitable for the in-demand turbine manufacturing.

Running the model again, you discover that the turbine manufacturer has a jobs multiplier of 4.8 (much higher than the other two), and an average earnings per worker of $70,000 per year (which includes benefits and owner profits). Bringing this company to the region could create as many as 1,900 additional jobs due to indirect effects.

In addition, they would also like to use some other vacated facilities to bring in a pharmaceutical preparation manufacturer that is interested in cutting its costs by moving to the area. It would be interested in supplying another 300 jobs. The jobs multiplier for this company is 2.2. So the county could pick up an additional 360 jobs due to indirect effects. This company is seeking $40 million in renovation, training, and incentives.

Short-term vs. Long-term Thinking

Now while all of these projects could really help the region, the third has the largest and most long-term jobs impact. With the first two, remember that once the road construction/infrastructure projects and HVAC retrofitting are finished, there is a high likelihood that these jobs would evaporate due to a lack of regional demand to sustain them (or they may have even been “imported” from outside the area in the first place). Also notice the high cost to create just one job in the first two scenarios ($380,000 and $270,000 respectively). The reason is that the first two, which are more closely associated with infrastructure improvements, have heavier costs built in because of the need to purchase the materials needed to complete these projects. Also, the first two examples are short-term projects and much more analysis would need to be done in order to link them to long-term job creation and local economic revitalization.

There is more: Short-term projects often carry with them boom and bust problems. They put short-term stress on school, transportation, and other public services, and sometimes leave excess capacity and added public burdens in their wake. Where these result in long-term increases in local taxes, the region could actually be left in a less competitive position than before, actually costing jobs in the long term. Of course, many projects won’t suffer from these problems, and a carefully conducted fiscal impact analysis can identify them in advance.

The third example, though, is very closely tied to actual job stimulus. The spending is going directly toward training and infrastructure that can support new “basic” industry opportunities with high multiplier effects. In addition, the money is being used to make the county more appealing to these growing industry sectors and their suppliers. Also notice that the cost per job is much lower ($27,125) and the multipliers are much, much higher (4.8 and 2.2 respectively). This primarily has to do with the fact that you are creating what is termed as “basic” industry growth—or that sort of industry that brings money into the region long-term. Non-basic industries tend to spend money that is already in the region. Finally, notice that we haven’t worked solely to create “green jobs.” However, the building improvements at the community college, and the manufacturing facilities, not to mention the fact that the industry that could be recruited could build wind turbines, actually makes this a very “green” project. Even for “green” projects, we must remember that from a regional perspective it is basic industries, and the jobs and income they support, that drive regional economies.

In this case the third option is going to be very attractive for those that are trying to figure out the best places to spend the stimulus dollars.

Infrastructure Improvement Reprieval

An important thrust of this discussion piece is that because infrastructure improvement projects will sometimes produce large short-run but negligible long-run effects, one should be cautious in courting these projects. Before concluding, however, some careful caveat is in order. Economic development in many parts of the United States suffers for want of effective infrastructure. Development is constrained by insufficient transportation systems, internet access, healthcare facilities, and even the arts and recreation infrastructure needed to attract and retain a professional workforce. The point is not that infrastructure projects should dismissed as job creators, but that the analytic bar for justifying these projects should be set higher than for projects that bring in basic industries.

Conclusion

These examples are intended to show how powerful and useful economic and workforce data can be and how useful it is when it comes to making well-informed decisions and understanding which project will be best for the community.
There is of course a lot of other analysis that can be performed here (skills compatibility, looking at regional purchasing to determine how to keep money from leaking from the region, and educational attainment and training programs that would complement these activities), but this is a good first step to understanding what investment will have the largest regional impact.

If you would like help assessing economic stimulus projects in your region, please contact us. We have customized consulting services as well as a suite of web-based tools that will allow you to perform detailed workforce and economic analysis. In addition, we have recently added fiscal impact modeling to our array of services.

Please contact us for more information:

Rob Sentz
(rob@economicmodeling.com)
866.999.3674

Download the Data Spotlight in PDF format: Green Jobs   

Introduction

Among the many economic stimulus proposals coming out of Washington of late are calls to transform the economy and reduce energy dependence through “green investments” and the creation of “green jobs.” But just what constitutes a “green investment?” And how does one distinguish a “green” from a “non-green” occupation?

With promises of major federal investments in the coming year, forward-looking regions are struggling to know how an emphasis on green development will change their economies, and specifically which green initiatives to pursue. This data spotlight uses EMSI’s Strategic Advantage suite of web-based tools to examine some of the issues.

What is a Green Job?

The US Department of Labor identifies nearly 900 distinct occupations (The Standard Occupation Classification System). Matters would be greatly simplified if we could simply scroll through the Labor Department’s list and identify some occupations as green and others as not. Unfortunately, things are not that simple. The consensus among those economists who address these issues is that the designation “green” turns not on the specific task associated with an occupation, but rather on the specific outcome of an occupational effort.

Accordingly, green jobs result in green investments. Green investments aim to drive households, companies, and governments to act in more “environmentally stable” ways (e.g. reduce pollution, increase energy efficiency, curb carbon emissions, improve air, soil, and water quality, etc).  A short-list of specific green investments includes:

•    Building Retrofitting,
•    Mass Transit,
•    Smart Grid,
•    Wind Power,
•    Solar Power,
•    Cellulosic Biofuels.

The list comes from the report entitled, “Green Recovery,” (download the pdf) which was produced by the Center for American Progress  and PERI. There is no question that there will be policy (and money) directed at these areas. Therefore, the question for regional decision makers is, which of these initiatives, or combination of initiatives, provides the greater economic development advantage to their region?  To answer this question requires (1) data on the specific regional economy, (2) data on the direct spending of the various investments, and (3) a careful distinction and estimation of short-term, (i.e., construction phase impacts), from the longer-term impacts associated with the investments in place.

At this point one of the first things we can do is look at occupations likely to be affected by the policy implications around the creation of “green jobs” and more specifically, green building projects. With the Obama administration calling for quick implementation of an economic recovery plan which includes vast public infrastructure projects and job creation with an emphasis on green jobs, a few key occupations were identified in the PERI report (see the table below). We have used that list as a starting point for our occupational analysis. In this paper, we’ll only focus on two categories: building retrofitting and mass transit/freight rail.

For occupational employment numbers, we used EMSI’s Economic Forecaster module, which provides the user with the ability to analyze industries (categorized by 2-6 digit NAICS), and occupations (categorized by 2-5 digit SOCs) for any county, ZIP, MSA, or custom region in the country.  For this analysis we have provided the national outlook for these occupations.

The Results

Retrofitting and repair of public buildings and public schools for the purpose of energy-efficiency will take on a number of forms, from simple light-bulb replacement to the entire overhaul of HVAC systems. Meanwhile, the Mass Transit/Freight Rail investment includes expanded bus and subway services to upgrades of the freight and light rail systems.

1. Building Retrofitting

The first table details how the selected occupations for Building Retrofitting have changed from 2005-2008. The point here is to generally understand the recent trends in these occupations: the employment, earnings, educational levels, and need for replacement workers. Note the number of replacement jobs, which include retirement and outmigration, often is larger than the total job growth on an annual basis. For more on the value of analyzing replacements, click here.

The next table lists the top industries that employ the occupations listed above. Keep in mind the 2008 figures are projections based on EMSI’s latest data set, which includes Current Employer Statistics. The addition of CES makes these numbers reflect the recent housing bust – a key reason why Residential building construction and Framing contractors are listed with negative 3-year growth.

Findings

1. Clearly, construction and other related sectors make up the lion’s share of these jobs. Indeed, that seems to be one of the more concrete ideas contained in Obama’s proposed stimulus package – aiding the construction sector. As a result, if this policy goes through we would expect a jump in the construction sector, which is currently in decline.
2. Half of the occupations included (Carpenters, Insulation workers, Roofers, Carpenter helpers, and Industrial truck/tractor operators) are showing a loss of jobs from 2005-2008. Yet the outlook improves greatly once we factor in replacement jobs.
3. Most of the affected occupations are in middle-skill areas – only one of the occupations (Construction managers) normally requires a bachelor’s. The rest of the list is comprised of jobs that do not require associate’s level or higher degrees.

2. Mass Transit/Freight Rail

The first table gives key figures for 10 occupations that PERI estimates will comprise the Mass Transit/Freight Rail cluster. Many of these jobs are higher-paying than those in the Building Retrofitting category, and most still only require on-the-job training, which would presumably create a lot of middle-skill jobs.

Below are the top industries that employ these occupations. This list was created by running an inverse staffing pattern.

Findings

1. Unlike in the Building Retrofitting category, all the industries that show up here report growth. The Architectural, engineering, and related services sector is particularly robust with 11% growth.
2. With respect to replacement jobs, six of the occupations (Civil Engineers, Rail-track layers, Structural metal fabricators/fitters, Welders, Locomotive engineers/operators, and Railroad conductors/yardmasters) report a double-digit spike.
3. Electricians is the only occupation listed in both the Building Retrofitting and Mass Transit categories.
4. Again, besides Civil Engineers, 2- and 4-year degrees are not required for these occupations. Six of them, in fact, require moderate on-the-job training, and three (Rail-track layers, Locomotive engineers, and Railroad conductors) have a median hourly earnings exceeding $20 an hour.

Assessing the Impact of “Green” Projects

In addition to the occupations listed in the PERI report and other details that have been released about the economic stimulus plan, the U.S. Conference of Mayors has come out with an exhaustive catalog of projects (download the pdf) that could be started right away in almost every American city. The list includes how much funding is needed for the infrastructure projects – everything from bridge improvements to paving roadways – and how many jobs are estimated to be created as a result.

With all these proposed projects, it’s important to assess the total economic impact to know which ones should have priority based on what industries will be affected – both directly and indirectly – and how much they will be affected. EMSI’s Economic Impact module provides users with the ability to run input-output scenarios for single industries or industry clusters. We plan to discuss these impacts in a future article.

Conclusion
We should know more about Obama’s economic recovery strategy in the coming months. In the meantime, the PERI report and the two categories we’ve looked at are good starting points to begin understanding what occupations will be affected.

With EMSI’s data, local planners and educators can easily see the demand for these occupations on a regional basis, as well as the earnings and education level required.  For questions about this data or to get a look at how these numbers stack up for your area, feel free to contact us.

Again, keep an eye out for more installments in this series as we work through some of the implications of “green” economic and workforce policies.