What Living Wage Means for 'Green Jobs'

March 30, 2010

Today, Governor Gregoire announced $16.5 million in grants for "for energy efficiency, clean technology, transportation and bioenergy programs throughout the state." The package of grants, she claimed, "supports and creates more than 2,000 living wage jobs." A closer look at the project reveals that the definition of "living wage" is fairly flexible.

Listed below are the projects funded by the grant, the number of jobs "created or retained" and the cost per job. The cost per job ranges from $174,063 to $477 (data are below the break).

The dramatic range of these estimates calls into question the claim that this "supports and creates more than 2,000 living wage jobs." Six of the 13 projects have a cost per job of less than $10,000. Four of the projects have a cost per job of $72,000 or more. Both high and low numbers indicate problems.

Low numbers might indicate that companies simply need a little push to help keep their marginal costs down to a point where they are competitive. Or, as we've seen before, the numbers of "jobs created" is simply padded to make the project look good. These might also be short-term jobs that should not be compared to long-term, stable jobs.

High numbers indicate that the project is simply not viable without major public funding. Remember also that these grants must also pay for material costs, so not all of the money will go to workers.

There are three important takeaways from the news about the grants:

First, this underscores that claims about "created or saved" are really political and have little relationship with the reality on the ground. Counting a job that can be saved for $447 the same as a job that costs taxpayers $174,063 shows how loose the definition of "living wage" is, especially when it comes to claiming political credit for job creation.

Second, there is no sense of what is lost by taking money away from taxpayers and businesses to fund these projects. If a company only needs $447 per job, it seems likely that they could borrow this if the project was truly worthwhile. If taxpayers have to cut current spending to pay taxes for jobs that cost $100,000, $106,667 or $174,063, then it is likely we are killing more jobs than we are creating. This is the consistent finding of economists across the globe who analyze government programs in order to create "green" jobs. In Spain, where such efforts are popular, economists found that they kill 2.2 jobs for every "green" job created.

Finally, there is no indication these projects are worthwhile. I can pay people either $447 or $174,063 to dig holes and fill them in. These costs don't indicate that any of these projects will be economically viable or productive.

Politicians are quick to claim they are creating "green" jobs. It's the trendy new political claim with which every politician wants to be associated. Like so many environmental fads, however, the reality is often less than meets the eye.