It’s hard to know where the fairy tale of “green jobs” first
came from. It was probably a clever marketing scheme by radical
environmentalists who realized that their anti-growth climate
change agenda wasn’t going to sell among the American electorate if
workers realized how many jobs would be eviscerated by the new
taxes and regulation. So, from somewhere out of Madison Avenue or K
Street, the left devised the green jobs story line: we can impose a
$1 trillion new tax on the U.S. economy over the next decade, and
it will save jobs, as hundreds of thousands of Americans begin
assembling windmills and solar paneling.
If we want to see how green policies work in the real world, we
don’t have to look any further than America’s left coast.
California has become the poster child of green jobs. Gov. Arnold
Schwarzenegger boasted in his 2007 State of the State Address that
“California has taken the leadership in moving the entire country
beyond debate and denial [on global warming] to action. As goes
California, so goes the nation.”
He’s right. California is the nation’s laboratory in green job
initiatives of the type that so many politicians in Washington,
D.C., and the states see as America’s economic passport to the
future. The Golden State was first in the nation in renewable
energy standards, it is the home of the most stringent cap and
trade legislation (called AB 32) to reduce carbon emissions, and it
has poured hundreds of millions of state tax dollars into renewable
energy research.
So where are all the green jobs? A new 2010 study by the
University of California-Berkeley comes to the sobering conclusion
that “the green economy accounts for just 1 percent of California’s
jobs.” That’s right: of the roughly 15 million California workers,
only about 159,000 have green jobs (and this was an expansive
definition of green jobs, including trash sorters at the
dumpsters). That same study did find that green employment is
“growing about 50 percent faster than the economy overall.” But
that’s mostly a reflection of anemic job generation in California’s
industrial base, and not a sign that green jobs are going to sprout
all over the state like avocado plants.
California’s heavy “investment” in green job projects — on the
types of initiatives that President Obama is all gaga over on the
national level — hasn’t added at all to overall state employment.
As of June, California had 2.2 million unemployed workers and the
fifth-highest unemployment rate in the nation at 12.3 percent. Even
if the state were somehow to quadruple its green jobs, the Golden
State would still have an unemployment rate above the national
average.
Nor has “going green” helped the state’s finances. The budget
deficit in Sacramento is expected to reach $20 billion and the
state’s credit rating of A- is the worst of any state in the
nation, while its default risk is rated on par with that of Libya.
California voters are partly to blame. In 2008 they approved a
$9.95-billion ballot initiative to build a high-speed “green” rail
project from San Diego to San Francisco and beyond. The state can’t
pay its bills already. Most rail experts believe the actual cost
will be multiples higher than anticipated, and that’s only for the
construction costs. The train figures to be an albatross around the
neck of the state budget every year in operating subsidies, much as
Amtrak is in Washington. By the way, you can take a Southwest
flight from San Francisco to San Diego for as little as $59.
Amazingly, even Gov. Schwarzenegger’s own economics team
concluded this year that the state’s green regulatory structure is
a menace to the state’s economy. The governor’s office study
concluded that California’s already iron-fisted environmental and
workplace regulations translate into about $176 billion in lost
output and nearly 4 million lost jobs. This study was so
embarrassing to the legislature and the Schwarzenegger
administration that it was suppressed for many months, until
several Republican legislators demanded its release.
Meanwhile, California’s celebrated AB 32 climate change law will
take effect in 2012. But it is already causing an outsourcing of
manufacturing, construction, and utility investment in anticipation
of the new regulations. A Riverside construction company,
CalPortland Cement, announced in late 2009 it was closing its plant
because of AB 32’s impending regulations. The CEO wrote: “A cement
plant cannot be picked up and moved, but the next new plant
probably won’t be built in California,” but rather in Nevada or
China.
Last year, researchers at the college of business at California
State University in Sacramento estimated that higher energy prices
from AB 32 will increase consumers’ food, utility, and housing
costs by $50 billion. That’s the equivalent of a 4.5 percent sales
tax on most consumer items Californians buy. Small business costs
would rise by $60 billion annually to pay for a policy that will
have at best a microscopic impact on global temperatures.
The Golden State is also first in the nation in stifling
renewable portfolio electricity standards. These are expected to
raise electric power costs on every Golden State business and
homeowner by 2 percent, which is like a $250 tax on a typical
family. Another expensive initiative, the 1 million solar roofs
project, will pour tens of millions more scarce tax dollars into
green programs the debt-drenched state can’t afford.
HOW DOES THIS ALL translate into jobs? Well, of course, it
doesn’t, and last year California Republicans held field hearings
in Reno, Nevada, to discover where all the businesses have fled.
The presidents and founders of more than 100 businesses, all
formerly in California, almost all said much the same thing.
Although taxes are excruciatingly high in the Golden State, the
businesses said they could tolerate those if it weren’t for the
regulatory climate. They couldn’t stomach the anti-business
attitude of so many of the California regulators. One former
manufacturer in Los Angeles complained that “the regulators come
onto your facility, and they want to shut you down. They view
businesses as enemy combatants.” Earlier this year, the EPA chased
out of town the last steel foundry in Los Angeles, a firm that had
hired hundreds of Southern California workers with good wages for
decades.
Joseph Vranich, a business relocation expert, has a database of
firms that move in and out of California. “Thanks mostly to
California’s hostile regulatory climate,” he says, “for every three
new businesses that move into the state of California, about 100
move out.” He’s compiled an exit list of A-list home-grown
California-based companies that are expanding operations elsewhere.
It includes Intuit, StarKist, Facebook, Northrop Grumman, and
Apple. Perhaps even more embarrassing is that when California’s
investments do generate new jobs, they are increasingly
located outside the state. In June, the hot Silicon Valley firm
MiaSolé reported that its planned home for one of the largest solar
factories in North America, a 500,000-square-foot 1,000-worker
plant, will be built in Atlanta.
Similarly, CalStar Products has erected its newest green plant
in Wisconsin. Since then, it has been awarded nearly $2.5 million
in federal clean energy tax credits through the American Recovery
and Reinvestment Act, and the company said, “We expect to build
additional plants down the Mississippi Valley and East Coast over
the next couple years” — and conspicuously, not in California.
Another green firm announced it will build its new plant in Wales.
Other states and nations are getting rich on California’s green
spending. Much like Europe, California is discovering that for
every green job that has been created, several more conventional
hardhat jobs have disappeared. The term “green jobs” is a fancy way
to say 12 percent unemployment.
Even the politicians in Sacramento are starting to realize the
tomfoolery of one state trying to stop planetary global warming all
on its own. So Mr. Schwarzenegger has been trying to persuade the
governors of other neighboring states like Arizona, Idaho, Nevada,
Oregon, and Washington to sign a Western state cap and trade
treaty. The other governors have declined, no doubt having observed
how well climate change legislation has worked in California.
The whole fight of jobs versus greens comes to a climax in
November, when voters will decide on a ballot initiative to suspend
the state’s global warming law until unemployment falls back to 5.5
percent. The initiative is polling well, but green groups around
the country are raising millions of dollars to defeat the measure.
This is Waterloo for the Green Movement. If California rejects
expensive job-killing remedies to climate change, other states will
surely follow. California, ironically, could be the state that
says, “Whoa: jobs first.”
