Primer, February 2010

Editor’s note:  Ohio Governor Ted Strickland earlier this year called for a focus on “green-energy jobs” at a time when the state is shedding jobs at an increasing rate. He proposed such measures as a $40 million Energy Gateway Fund for high-tech energy companies and eliminating Ohio’s tangible personal property tax for green energy companies that break ground this year and start producing energy by 2012. Just this month, Ohio education and workforce leaders spent considerable time at a statewide conference talking about how to prepare more workers for green jobs. To understand this opportunity better, Ohio Education Matters asked the Center for Community Solutions to project employment trends and training needs in select green industries to provide solid information for Ohio leaders in their employment training and economic development efforts. We offer a summary of those findings and recommendations in this month’s essay.

 Ohio Green Jobs and Workforce Needs

By  John Habat  

Senior Fellow, Center for Community Solutions

Ohio was a leader in traditional manufacturing for more than 100 years. As traditional manufacturing left the state for foreign shores and modern technology fueled cheaper production processes, Ohio lost – a loss that leaves a continuing legacy of struggles: economic, employment, environmental, educational and social. But there is good news: Our state’s manufacturing is being revitalized by adapting to green industries. Ohio businesses sense this transformation: They project very substantial growth in green business and green employment over the next several years and decades.

The outlook for green jobs in Ohio

According to a report issued by The Pew Charitable Trusts in June 2009, new jobs connected to the green economy grew 9.1 percent between 1998 and 2007. Based upon employment projections from a variety of recent studies, a reasonable estimate is that 15 to 20 jobs are created for every $1 million expended in green economic activities.

Our research found that:

<!--[if !supportLists]-->·         <!--[endif]-->The $82 billion in federal funds and tax credits authorized in the American Recovery and Reinvestment Act for renewable energy and conservation activities will potentially create between 1.2 and 1.6 million jobs over the next two years – 45,000 to 62,000 of them in Ohio.

<!--[if !supportLists]-->·         <!--[endif]-->Green businesses are very optimistic on future growth prospects:

<!--[if !supportLists]-->o   <!--[endif]-->Business Growth: 54.6 percent of respondents projected moderate (4 to 8 percent) to significant growth (9+ percent) of their businesses over the next two years, and 69.9 over the next five to seven years.

<!--[if !supportLists]-->o   <!--[endif]-->Employment Growth: While employment projections slightly lag business growth projections, they are also optimistic: 43.2 percent of respondents projected that employment in green jobs would grow from moderate to significant over the next two years, and 55.9 percent over the next five to seven years.

<!--[if !supportLists]-->·         <!--[endif]-->Businesses engaged in energy efficiency activities – specifically building and residential climate controls (HVAC) – dominate the green economy. Reducing energy usage for interior climate control offers the largest reduction potential, the quickest pay back of investments, and the most new jobs.

<!--[if !supportLists]-->·         <!--[endif]-->The large majority of businesses (86.6 percent) engaged in green economic activities have fewer than 100 employees; almost three‐fourths have 25 or less.

<!--[if !supportLists]-->·         <!--[endif]-->For many businesses, engagement in green economic activity represents a relatively small percentage of their workforce; however, for 37.4 percent, their workforce is at least 50 percent engaged.

<!--[if !supportLists]-->·         <!--[endif]-->The skills and capabilities of existing workers are readily adaptable to green jobs.

<!--[if !supportLists]-->·         <!--[endif]-->Half of all respondents are not experiencing any challenges in filling their employment needs; the other half identified challenges that break almost evenly between basic skills and advanced skills. 

<!--[if !supportLists]-->·         <!--[endif]-->Businesses generally are able to fill their need for employees with specialized skills, though this likely will become a greater challenge once the economy improves.

<!--[if !supportLists]-->·         <!--[endif]-->A large majority (70 percent) of all businesses indicated that at least some of their employees in green jobs need specialized skills. There is a significant need for engineers, educators/trainers, HVAC mechanics/installers, and electricians.

<!--[if !supportLists]-->o   <!--[endif]-->More than one out of four businesses identified need for some type of engineer in their businesses.

<!--[if !supportLists]-->·         <!--[endif]-->Workers in green jobs are represented at all skills levels – from lower to professional.

<!--[if !supportLists]-->o   <!--[endif]-->There appears to be a greater need for persons with a Bachelor Degree as compared to those having an Associate Degree.

<!--[if !supportLists]-->·         <!--[endif]-->Most of the training of new skills to existing employees is done by an in‐house trainer with training time of 80 hours or less.

<!--[if !supportLists]-->o   <!--[endif]-->More than 12 percent of the businesses indicated a need for in‐house educators or trainers.

<!--[if !supportLists]-->·         <!--[endif]-->There is a decreasing need for workers in green jobs with a high school degree or less, but workers at that skill level still comprise more than half of the jobs at green businesses.

<!--[if !supportLists]-->·         <!--[endif]-->A solid majority of respondents (58.3 percent) indicated that there are career‐ladders for lower‐skill workers in their businesses.

<!--[if !supportLists]-->·         <!--[endif]-->Most of the businesses (58.3 percent) have been engaged with green occupations for seven years or less.

Potential Employment Impact  

Although this study did not seek to project the number of jobs that may be potentially created in Ohio as a result of moving away from fossil fuels toward a green economy, there are several studies that attempted such quantification. Based upon these, the Center for Community Solutions (CCS) calculated some macro projections of green jobs in Ohio.

Based on a cumulative average of these projections, a reasonable composite projection of jobs created per $1 million investment is approximately 15 to 20 direct, indirect, and induced jobs.

The American and Recovery Reinvestment Act (ARRA) provides a minimum of $62 billion in federal funds for a wide variety of renewable energy and conservation activities, plus an additional $20.3 billion in tax credits18 for individuals and businesses, for a total of $82.3 billion. This amount is in addition to funds and tax credits that were included in the regular federal budget.

Using the above approach of estimating potential job creation (15‐20 jobs per $1 million invested), ARRA funds and credits can potentially generate 1,234,500 to 1,646,000 jobs nationally during the next two years. Assuming Ohio obtains an amount based upon its share of national population (3.77 percent), the state will have 46,540 to 62,045 new jobs related to renewable and green energy economic activity. This is a conservative estimate that does not fully account for the concentration of manufacturing in Ohio that is likely to produce a disproportionate amount of the equipment and machinery used in renewable energy products, such as solar panels and wind turbines. “[T]he 20 states benefitting the most from investment in wind are almost identically the 20 states that have lost the most manufacturing jobs in the country over the past 3 years…. The potential benefit to Ohio manufacturing industries is even greater.”1

Recommendations

Based upon the research and findings in this report, CCS offers the following recommendations to the State of Ohio; post‐secondary education, training, and workforce institutions; and to foundations and other organizations working to advance green economy and green jobs.

<!--[if !supportLists]-->1.       <!--[endif]-->Energy efficiency measures offer the most immediate and significant opportunities to reduce a substantial amount of energy usage and to create the most jobs. A more in‐depth study should be undertaken of the specific workforce needs associated with energy efficiency (climate control and lighting) in office buildings and residences, which are responsible for 40 percent of all U.S. energy consumption. As noted in this report, there are more than 5,000 Ohio businesses engaged directly in HVAC alone, and thousands more in the supply chain related to it.

2.    A capacity assessment of the post‐secondary educational resources and training programs specifically linked to HVAC and lighting should be undertaken.

3.    All types of engineers – electrical, mechanical, environmental, civil, materials, chemical, structural, systems – are the professionals upon which the movement to renewable energy and green jobs is being built. In total, 26.6 percent of the businesses identified some type of engineer as the specialized skills needed in their workplace. A capacity assessment of Ohio universities’ engineering programs should be undertaken.

4.    Almost 68 percent of businesses indicated that they provide in‐house training; 12 percent of businesses indicated a need for an in‐house educator/trainer. It is important to understand why these training programs are being done in‐house, and to what extent government workforce programs can partner with businesses to secure the training needed.

a. The state should analyze each renewable energy sector and identify specific engineering needs unique to that sector.

b. The state should identify other skilled‐jobs, such as electricians, that are needed by some or all of the energy sectors.

5.    Few jobs will exist for persons lacking a basic education. State and local education providers must continue to focus on basic skills training – including the so‐called soft skills – and on increasing the rate of high school graduation.

1. Component Manufacturing: Ohio’s Future in the Renewable Energy Industry, Renewable Energy Policy Project, October 2005, pp. 3 and 5.

About the Author

The Center for Community Solutions is a nonprofit organization that provides strategic leadership to improve targeted health, social and economic conditions. It helps policymakers, community leaders and service providers identify health, social and economic challenges, and target resources toward sound, cost-effective solutions. Based in Cleveland, its goal is to provide information, support and advocacy to help community organizations and service providers address the significant problems faced by Northeast Ohioans. http://www.communitysolutions.com/