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Why Do Green Jobs Pay Better Than Other Jobs?

by Michael Levi
August 30, 2011

I’ve always been skeptical of the oft-heard claim that “green jobs” are “good jobs” – that is, that green jobs somehow pay better than other ones. A recent Brookings Institution study, though, takes a rather thorough look at the “clean economy”, and concludes quite emphatically that green jobs do in fact pay better than the typical U.S. job. That invites an obvious question: Why?

A decent part of the answer, perhaps unsurprisingly, lies in the sorts of educations that clean energy jobs appear to demand. The Brookings study finds that 93.1% of clean economy jobs are “high skill” or “moderate skill”, in contrast with only 71.7% in the overall economy. Everything else being equal, industries that require more education and skills will pay better.

There are big limits, though, to the economy-wide impact that different skills/education demands can have on wages. If jobs for people with, say, college educations pay better, and clean economy jobs tend to require college educations, then clean economy jobs will tend to pay better. But unless more people start attending college, the total number of Americans earning those higher wages won’t actually rise. The same is true for moderately skilled workers. Of course, over the longer term, the availability of more jobs that demand more skills will create greater incentives for people to seek more education. But the presence of more green jobs won’t transform high school dropouts into PhDs, or into technical college graduates for that matter. In any case, the skills/education profile of fossil fuel jobs is even stronger than that of green ones.

That’s why another statistic is all the more striking: ClimateProgress reports that low-credentialed workers (high-school degree or less) with green jobs do surprisingly well. According to their numbers, 41.5% of people with fossil fuel jobs, and 47.9% of those with green jobs,  have low credentials and get paid an average of $12 per hour. Somewhat surprisingly, though, 28.7% of green workers with low credential make a (stronger) average wage of $15 per hour, in contrast with only 13.2% of fossil fuel employees. The Brookings study also reports that clean economy jobs for “those without post-secondary degrees… provide higher wages than typical ‘low-skill’ jobs”.

What gives? First, a caution: the Brookings study and the one reported by ClimateProgress use different definitions for green jobs. Moreover, they use different methodologies for determining average wages. That said, another set of figures from the Brookings study provides a clue.

The Brookings authors report that most clean economy jobs aren’t the stereotypical ones in wind energy or home insulation retrofits. The biggest clean economy sectors are waste management and treatment, mass transit, and conservation (working mainly for the U.S. government), which together account for nearly 40% of clean economy jobs. (Wind, if you’re interested, accounts for about 1% today.) What do these have in common? They’re public sector jobs – and they then to be heavily unionized. (Let me make sure I’m being clear: this interpretation is mine, not the Brookings authors, who don’t flag the union vs. non-union issue.) My guess is that this is a big part of the explanation for why clean economy jobs appear to pay better to people with similar levels of education.

To be fair, I doubt that this is the whole story. In particular, downward wage pressures are much higher lower in tradeable sectors than in non-tradeable ones, so the balance of jobs types in a growing clean economy should have broader consequences for U.S. wages. That said, the Brookings study shows that clean economy jobs are actually more export-intensive than the economy as a whole, which suggests that this effect might run the other (i.e. negative) way.

But back to the unionization issue. There’s nothing wrong with the fact that clean economy workers might benefit from greater unionization rates (though I’d want to see more careful research before converting my hypothesis into a fact.) But it does call into question the degree to which one can extrapolate from current figures to project future wage gains from growth in green jobs. People installing solar panels or performing home retrofits – the poster children for the green jobs, good jobs mantra – probably aren’t going to be unionized, nor are others involved in providing energy services (though regulated utilities tend to be fairly union-heavy). It may be unlikely, then, that they’ll have any special advantage over others with similar educations.

In the end, if the number of green jobs grows, it will be good because it will be a sign that the economy is becoming cleaner. Unless the United States gets its educational and labor systems in order, though, it’s unlikely to address the stagnant incomes of middle class Americans that have so many people rightly worried.

Post a Comment 3 Comments

  • Posted by David B. Benson

    Could also compare with those working in all aspects of providing nuclear derived electrical power. I suspect pay is quite good in that industrial segmant, but I currently have no actual statistics.

  • Posted by David Barth, CFA

    The cost of having and waiting for a “green economy” is resulting in a loss of wealth and irrationality halting growth of needed energy. In the long-run we are all dead anyway so why put the burden unsubstantiated benefits of a “green economy” on a weaken economy? What are the costs and benefits? No one has given any details because it is not known. Those quangocrats and political class who don’t believe expanding current energy while developing economical green jobs can’t seem to walk and chew gum at the same time.

  • Posted by David Barth, CFA

    The cost of having and waiting for a “green economy” is resulting in a loss of wealth and irrationality halting growth of needed energy. In the long-run we are all dead anyway so why put the burden of unsubstantiated benefits of a “green economy” on a weaken economy? What are the costs and benefits? No one has given any details because it is not known. Those quangocrats and political class who don’t believe expanding current energy while developing economical green jobs can’t seem to walk and chew gum at the same time.

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