Obama's Green-Energy Jobs Lie

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For several years the public has been told that "green energy" --an expansive term that embraces renewable energy, pollution reduction, and conservation-- will create jobs in America, lots of jobs. And that the federal government must subsidize green energy to create these jobs.

Now it turns out that story is nothing but a fairy tale.

At a hearing Wednesday before a House Oversight and Government Reform subcommittee, the Inspector General of the Energy Department and an Assistant Inspector General of the Labor Department testified that funds authorized by Congress to create green jobs had not been spent or, if spent, had yielded meager results.

Elliot Lewis, the Labor Department's assistant IG for audit, testified that an audit of the Department's green jobs training program showed that only 2.5 percent of individuals originally enrolled were still employed in the jobs for which they were trained six months after the start of their job. Whether they had gone on to other jobs, green or otherwise, or become unemployed, the Department's tracking system did not say.

Gregory Friedman, IG of the Energy Department, testified that as of late October, 45 percent of funds appropriated by the 2009 American Reinvestment and Recovery Act (the stimulus bill) for green energy had not been spent, because few "shovel ready" projects existed.

The testimony of the two IGs shows why green jobs programs have not succeeded in increasing employment. Instead, government money is either wasted, or unspent.

Mr. Friedman said, with regard to weatherization programs, "The main abuses were charging for work that wasn't completed or done at all, abusing priority sequence, premiums for things that could have been gotten for a lower cost."

Take the Green Jobs training sponsored by the Labor Department's Employment and Training Administration. As of June 30, ETA had awarded $490 million of the $500 million provided by Congress for the program. The funds were awarded to state workforce agencies, community colleges, and nonprofits. Green jobs were defined as those "associated with products and services that use renewable energy resources, reduce pollution, and conserve natural resources."

ETA money trained some workers in green jobs such as hybrid- and electric-car auto mechanics, weatherization of buildings, and solar panel installation. Other workers received job referrals, training in basic workforce readiness skills, and credentials and support services to overcome employment barriers.

Yet, two-and-a-half years after Congress passed the Recovery Act and almost three-quarters of the way into the program, grantees had spent only $163 million, about a third of the funds earmarked for them.

With only 1,336 trainees still employed after six months, my simple mathematical calculation yields a taxpayer cost of $121,257 per job.

Perhaps it was a good thing, given the meager results, that so little was actually spent by the states.

Here's how the numbers break out. Out of 53,000 people who were served by the ETA programs, 47,000 enrolled in training. Of them, 26,000 completed training, and 8,000 found jobs. Of the 8,000, only 1,366 were employed six months later.

With the number employed by the Green Jobs program less than two percent of ETA's target of 69,717, and another $327 million left unspent, the program does not appear to be on track. In its defense, ETA told the IG that in the remaining months of the program the grant recipients would manage to spend more money and train more people.

But this appears unlikely, the Labor Department IG said. He recommended that any of the unspent $327 million that was not being used by the states be returned to the Treasury.

The Energy Department had similar problems spending its recovery funds, according to IG Friedman. Out of the Energy Efficiency and Conservation Block Grant Program, almost a third, or $879 million, had not been spent as of March 31, two years after enactment. In Energy Delivery and Energy Reliability, $2.6 billion, or 57 percent, was unspent.

Even more disconcerting, when the funds were spent, the work was often of poor quality. In one state audit, 9 out of 17 weatherized homes failed inspection due to substandard workmanship. One subcontractor gave preference to relatives and employees, even though the target population was elderly and handicapped residents.

In response to a question by Representative Scott DesJarlais, a Tennessee Republican, Mr. Friedman explained that state and local government were unprepared to receive the grants. "Not to make light of a serious situation, but it was like attaching a lawn hose to a fire hydrant," he said. "The governments were overwhelmed."

The IGs held out no hope for better outcomes, a sentiment shared by other witnesses.

David Montgomery of NERA Economic Consulting, testified that opportunities for green jobs are few because the price of carbon emissions in America is too low. If the government wants to create green jobs, he said, it must tax carbon emissions directly.

Without a carbon tax, there is no demand for green technology, and it remains dependent on everlasting government subsidies, Montgomery argued. That's why there's no mass market now for electric vehicles, and no broad market for green technology beyond the one created by federal and state governments.

This would further increase energy prices and slow the economy. Yes, businesses and consumers would change technology to save money, just as the higher gasoline taxes in Europe have resulted in smaller, more fuel-efficient cars. But this would leave consumers less cash on hand for other expenditures.

Gregory Kats, president of Capital E, a venture capital firm, and a witness for the Democrats, testified that the need to invest large amounts of money in the economy has posed serious challenges, including scaling up capacity for training, developing programs, and recruiting.

But, on balance, he concluded that "evaluation of employment impact from multiple non-partisan organizations...demonstrate large and positive employment impact from ARRA clean energy and green funding."

Mr. Kats is on weak ground, because since the end of the recession, in June 2009, the economy has gained only 841,000 nonfarm payroll jobs, a small return on $825 billion in stimulus spending. If jobs were actually created by government spending, and there is scant evidence to support such a proposition, the stimulus bill cost nearly $1 million per job created.

American students are graduating from high schools, technical schools, and colleges where they are being taught that government investments in green energy will lead to more jobs. But when they search for jobs, these students are learning the hard way that the government-inspired stories about green energy leading to jobs is nothing more than science fiction, and more fiction than science.

Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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