May 21, 2009 by Joshua Wright
I. Entrepreneurism and Green Jobs
In his Earth Day address in Newton, IA, the President said (in reference to the ARRA and tax credits for environmental improvements),
“And these steps will spur job creation and innovation as more Americans make purchases that place a premium on reducing energy consumption. Businesses across the country will join the competition, developing new products and seeking new consumers.”
And further down in his speech . . .
“That young guy in the garage designing a new engine or a new battery, that computer scientist who’s imagining a new way of thinking about energy, we need to fund them now, fund them early, because that’s what America has always been about: technology and innovation.”
As a result, the true manifestation and development of the green economy ultimately rests on the shoulders of the sort of companies and individuals that will create products and services that are in demand, fulfill needs, and solve problems. The ‘green’ economy, (like any other economy) needs entrepreneurs to grow. Again, this all harkens back to the need for individuals and young people to apply themselves, and it speaks to the fact that there is no clear or defined “career pathway” for carving out a career in the green economy.
As economists familiar with both government interventionist and entrepreneurial schools of thought and familiar with our present day economic crisis, we see a lot of value in taking the latter approach. We are at a time in our nation’s history where many industry sectors are being shaken up (or down in a more accurate sense). A big result of this is that a lot of regions, especially places like Michigan, Ohio, Illinois and other Rust Belt states, are losing what is referred to as their economic base (e.g. the industries that are primarily responsible for bringing in the most amount of money, jobs, earnings, and well-being). This means that as one job is lost in one sector perhaps as many as 5, 10, or even 20 jobs are lost via indirect effects. This has to do with the fact that a complex web of industries has grown up to support and sell to manufacturing companies that spend a lot on many sorts of materials.
The job loss in and of itself is a big enough problem. However, with dramatic declines happening across many sectors there are far fewer opportunities for transitioning into new occupations. So what are we to do with many of these new jobseekers? During more stable times we could likely transition them to another manufacturing company that was looking for similar knowledge and skills sets. However, with the wholesale decline of this sector, there are no real places to transition folks to.
So we are left with two choices—leave or do something new. And this is why we think the entrepreneurial angle is vital. A recent special report by The Economist (PDF download) on the topic of entrepreneurship does a good job of pointing out that many of the United States’ major companies were in fact born out of recessions, and that recessions free up labor and resources which are then reapplied in new and more effective ways. Thought of this way, recessions are a sort of “cold shower” that wakes you up to the fact that things need to change. It’s time to rethink what we are doing, which means seeking out new opportunities, taking risks, and working really hard.
A recent interview with the Professor of Entrepreneurial Studies and Case Western University, Scott Shane, also confirms this view. Shane says that, “There is this pattern [that normally] occurs when people lose their jobs. As their opportunity cost of starting a business goes down, so their probability of doing it goes up.” The article goes on to point out that in Ann Arbor, MI, there has been a lot more interest in entrepreneurship, and regional meetings on the subject are very well attended. Diana Durance, Executive Director of the Washtenaw Development Council also adds, “One of the positive effects of this horrible downturn that we’re in is you do get a sense of, ‘Well I have nothing to lose now. I can do what I’ve always wanted to do.’ I see people pursuing their dreams.”
The best way to develop and sustain this movement is to allow individuals and corporations to create products and services that impart some value to society. There is a long history of governments trying to create real market demand, and supporters of the green movement have said that the government needs to help drive it. However, successfully carrying out such a venture in a nation with an economy as large and diverse would require levels of regulation and taxing that could easily have more negative repercussions than positive. In addition, much of the job creation and policies that the government is enforcing are not associated with significant, long-term improvements in wages, labor markets, or skills. As industries innovate and create new products and services matched to real labor market demands, this will help to create economies that provide better wages, and longer-term career opportunities.
The industrial revolution had its Rockefellers and Carnegies, and the information age has its Microsofts, Apples, Googles, Facebooks, Ciscos, etc. The key element is that the folks that created or helped to create these companies matched a need to the demands of the current economy. Without such a champion, it is doubtful that the green economy can maintain itself as something more than a short-term trend. This is why jobseekers and young people should be encouraged, trained, and supported in being innovative, thoughtful, and keyed into the sorts of products and services that could be in demand.
In the new, undefined, green “Wild West” scenario the real winners will be those who come up with the best ideas and work the hardest to create useful products and services. As a result, all sorts of education and training, not just engineering, LEED certification, and perhaps environmental science, will be valuable (and green). Jobseekers and young people should also be told that there is no specific career path that will serve as the yellow-brick road to the green economy. Because it’s an undefined job market, it’s up to students to apply themselves, learn, read, talk to people/business, and offer new and creative solutions.
A helpful step that training providers can take in shortening the distance between a learner and the actual job market (or new invention) is to talk to local employers, learn what their needs are, use data to look at trends, and be familiar with the sorts of things that local companies are spending a lot of time and money on. Such information will help training providers design more meaningful programs, and will help young people know and understand where they can focus their creative talents.
Above all, this seems like the key to the green jobs movement.
And there are already some outstanding examples of such activities.
A California-based company called Aquentium has figured out how to use shipping containers (of which there is a huge overabundance) for housing during disaster relief missions.
Rent-A-Green Box, based in Costa Mesa, CA, uses hard-to-recycle plastics from local landfills to create the Recopack, which is an environmentally-friendly packing solution that will cut down on the need for cardboard boxes.
Green Truck is a company that delivers organic produce (in and around Los Angeles) using only solar power and used vegetable oil.
Interface Inc. is the world’s largest manufacturer of modular carpet, which it markets under the InterfaceFLOR, FLOR, and Bentley Prince Street brands. Bentley Prince Street also is a leader in the designer-quality broadloom carpet market. Interface, headquartered in Atlanta, is committed to sustainability and to doing business in ways that minimize the impact on the environment.