The promise of the clean energy economy for American workers

One week after taking office, President Biden signed sweeping executive orders outlining ambitious plans to tackle the climate crisis and speed the transition to a clean energy economy, and promised that workers in the fossil fuel economy will not be left behind.

“Today is Climate Day at the White House, which means that today is Jobs Day,” Biden said. He pointed to “a clean energy future that will create millions of good-paying union jobs,” and vowed: “We’re never going to forget the men and women who dug the coal and built the nation. We’re going to do right by them and make sure they have opportunities to keep building the nation and their own communities and getting paid well for it.”

Last week, Biden followed up on that pledge by proposing to invest $2 trillion in infrastructure and clean energy projects that will “create good-quality jobs that pay prevailing wages in safe and healthy workplaces while ensuring workers have a free and fair choice to organize, join a union, and bargain collectively with their employers.”

But some union leaders and rank-and-file members are skeptical – with good reason.

“The U.S. has, historically, done a poor job of helping people who have been displaced by economic dislocation,” says a recent analysis by The Hechinger Report. Labor experts told the education news nonprofit that U.S. spending on workforce development is far less than in other developed economies, and federal programs to help displaced workers find new careers have “an uneven record at best,” leaving workers “in the lurch” even if they retrain for jobs “billed as high-demand.”

“There never has been an example of a just transition in this country,” Phil Smith, communications director for the United Mine Workers of America, told Vox. He was explaining why the union opposed the Green New Deal proposed by Rep. Alexandria Ocasio-Cortez of New York and Sen. Ed Markey of Massachusetts – despite the fact that it states the need to create high-wage jobs and reverse decades of anti-labor practices. 

Can this time be different? Can we rapidly move from fossil fuels to clean energy without stranding millions of American workers? This report shows why we can. The reasons:

• Clean energy jobs already far outnumber fossil fuel jobs, and millions more will be created in coming years.

• The looming skilled labor shortage, the transferrable skills of fossil fuel workers, and innovative union-backed training programs put fossil fuel workers in strong position for the transition to clean energy jobs.

• While the pay gap between fossil fuel jobs and clean energy jobs is real, on average, clean energy jobs requiring skilled labor are competitive with many fossil fuel jobs, and provide better pay and benefits than the average American job.

• With burgeoning support from federal and state policies, unions are in a strategic position to grow their ranks in clean energy jobs – and clean energy industries must also embrace unionization.

Clean energy jobs already far outnumber fossil fuel jobs, with millions more on the way

A study commissioned by E2 (Environmental Entrepreneurs), the American Council on Renewable Energy and the Clean Energy Leadership Institute found that in 2019, more than 3.3 million Americans worked in clean energy jobs – renewable energy, energy efficiency, clean vehicles and fuels – nearly three times the number in fossil fuels.

Last year’s pandemic-triggered economic crash caused a net loss of 500,000 clean energy jobs. But the E2 report sees an opening for a rapid rebound:

Moving forward, if done right, the clean energy economy can provide opportunities for an equitable nationwide economic recovery. Federal policy and stimulus initiatives can focus on ensuring that the economic recovery supports the creation of higher-wage employment opportunities that are accessible to all individuals across the country – better employment opportunities than many other jobs that were quickly lost during the economic downturn.

Last year, the Public Economy Research Institute, or PERI, at the University of Massachusetts at Amherst, analyzed the construction and manufacturing jobs that would be created through federal government investments in clean energy of about $335 billion annually for 10 years. Combined with private investments roughly doubling the total amount, that’s what the Sierra Club, in a letter to Congress last year, said is needed for the U.S. to cut greenhouse gas emissions almost in half by 2030 – the target set by the United Nations Intergovernmental Panel on Climate Change to head off the most severe impacts of the climate crisis.

PERI’s analysis found that from public investment alone, almost 1.2 million direct jobs in clean energy would be created annually.

Construction and manufacturing jobs created through federal investments
in clean energy

Source:  EWG, data derived from PERI

Other projections of jobs that can be created through investment in clean energy are equally promising. For example:

• In October, a report by The Economic Policy Institute, or EPI, estimated that a four-year, $2 trillion investment in infrastructure and clean energy would directly and indirectly create between 7 million and 13 million jobs. More than 40 percent would be in “high-wage manufacturing and construction industries.”
• Another recent report, by the Goldman School of Public Policy, at the University of California at Berkeley, estimated that implementation of state and federal policies needed to reach 90 percent clean energy by 2035 would more than double the number of union construction jobs yearly, compared to maintaining current policies.

It will take strong leadership from the Biden administration, Congress and state governments to invest on a scale needed to make such projections real.

Encouragingly, last week Biden unveiled the American Jobs Plan. It proposes investing $2 trillion this decade for projects such as manufacturing electric vehicles, retrofitting homes and commercial buildings to use energy more efficiently, expanding tax credits for clean energy, capping abandoned oil and gas wells, modernizing public transit and rail service, and much more.

But in the race to transition to clean energy, private investors are already miles ahead. The Forum for Sustainable and Responsible Investment reports that U.S. investors put $4.8 trillion into climate initiatives last year. Investment in so-called ESG stocks – environment, sustainability and governance ­– increased by more than 40 percent from 2018, and will continue to increase. “Climate change/carbon emissions” is ESG investors’ top priority.[1]

The sharp decline in old-energy jobs

Although the sky’s the limit for clean energy jobs, the outlook in old-energy industries is grim.

• Coal is on its deathbed. More than 300 coal-fired power plants have closed in the U.S. since 2010, almost 50 more are slated to close by 2025 and investment bank Morgan Stanley predicts coal will be gone from the U.S. power grid by 2033, largely replaced by renewables. Since 2012, more than 46,000 coal miners have lost their jobs.
• Oil and gas industry analysts Haynes and Boone report that since 2015 nearly 800 exploration, production, oilfield services and so-called midstream oil and gas companies have filed for bankruptcy. Major banks are cutting back or eliminating funding for oil and gas projects. The fracking-driven natural gas boom has turned to bust. Since 2014, the oil and gas sector has lost about 65,000 jobs.
• “All of the above” advocates tout nuclear power as clean energy – it doesn’t emit carbon pollution, but it's neither clean nor safe – but for its entire history the U.S. nuclear industry has been a money pit. Every nuclear plant in the Midwest and mid-Atlantic states likely lost money last year, and operators are desperately seeking state government bailouts. In 2019, the industry employed just 5,000 nuclear engineers and technicians. Now the industry is hyping so-called small nuclear reactors, but the only approved design has already suffered huge cost overruns in the development phase, and its pilot project has been delayed until the end of the decade.

Most fossil fuel workers are ready for the transition, and unions are helping more prepare

The Global Energy Talent Index report for 2021 warns that “the biggest threat” to the future of all energy sectors is “a looming talent crisis” of skilled workers.

Over the next decade, the Brookings Institution estimates that three million infrastructure workers will retire from sectors including energy, water and transportation. The 2020 U.S. Energy and Employment Report, produced by the Energy Futures Initiative in partnership with the National Association of State Energy Officials, says more than 80 percent of energy employers surveyed had difficulty hiring qualified workers last year.

The energy sector’s skilled labor shortage may be a crisis for employers, but it’s a golden opportunity for workers with a wide range of existing skills.

The E2 jobs report cited above says that most clean energy jobs are not niche specialties, but “well-known occupations . . . [in] manufacturing, construction, wholesale trade, and professional services,” such as electricians, heating and cooling technicians, mechanics and welders, “who have already acquired the needed skills and knowledge that are pivotal to modernizing the nation’s grid infrastructure, producing electric vehicles and component parts, selling clean energy technologies, or installing and maintaining efficient lighting and HVAC systems.”

For workers who need to upgrade their skills, unions will play a key role in equipping them for the transition.

Construction jobs – both union and non-union – dominate most clean energy fields, according to the energy and employment report. North America’s Building Trades Unions, an umbrella organization of unions representing more than three million skilled craft professionals, operates more than 1,900 training centers across the country. A large majority of trainees are learning construction trades, and three-fourths are training for union jobs. In 2019, the 50,000-member Utility Workers Union of America began a program to provide training for its members in on- and offshore wind, solar and battery storage.

The clean energy transition will create jobs in unexpected areas.

In March, the Biden administration committed to backing offshore wind projects along the Atlantic seaboard that by 2030 will generate enough electricity to power 10 million homes for a year. The administration says that will create nearly 80,000 direct and indirect jobs. That will also boost shipbuilding.

The Department of Energy says hundreds of ships will be needed to erect turbines for those offshore wind farms – what the president of the Shipbuilders Council of America called "the biggest market we’ve seen coming online in a generation.” Ørsted, a European offshore wind developer, and Virginia-based utility Dominion Energy have already began placing orders for vessels with Gulf Coast shipyards. Ørsted will also partner with the building trades unions to train their members to build offshore wind farms.

Congressional leaders from key states are also advancing initiatives to help fossil fuel workers and communities and industries tied to the fossil fuel economy.

Sens. Joe Manchin of West Virginia and Debbie Stabenow of Michigan recently introduced the American Jobs in Energy Manufacturing Act, which would provide $8 billion in federal tax credits to manufacturers that invest in new or expanded facilities to make parts and technologies needed to reduce carbon emissions. Half the money would go to helping provide well-paid manufacturing jobs to coal miners and power plant workers in rural areas who have lost their jobs. The tax credits would also boost auto manufacturing in Michigan and elsewhere.

Rep. Debbie Dingell, also of Michigan, recently reintroduced legislation to boost the rapidly growing electric vehicle industry. The USA Electrify Forward Act would provide grants to overhaul manufacturing facilities to produce EVs and batteries.

Clean energy jobs provide above-average pay and benefits

The E2 jobs report found that overall, median hourly wages for clean energy jobs are about 25 percent higher than the national median, and those jobs are more likely to come with health care and retirement benefits than private-sector jobs across all industries.

The report found that clean energy jobs are competitive with fossil fuel jobs. On average, coal, natural gas and petroleum fuel jobs pay a median of $24.37 an hour; jobs in solar and wind about $24.85; and jobs in energy efficiency $24.44. On average, more than 80 percent of skilled clean energy workers in 12 key occupations have health insurance, compared to three-fourths of fossil fuel workers.  

Bureau of Labor Statistics data show that median annual wages for non-supervisory clean energy jobs range from the mid to high $40,000s for solar, onshore wind and energy efficiency to the $50,000s and above for offshore wind. The living wage varies from state to state, but those salaries are well above the national average living wage of about $33,500 a year.[2]

Many of the best-paid existing energy jobs are not threatened by the shift to clean energy. Utilities, for example, employ about 240,000 workers to install and repair transmission lines, and more than 50,000 as power plant operators. The Bureau of Labor Statistics reports the average median wage of line workers exceeds $65,500, and that of power plant operators tops $90,000. Those jobs will still be needed in a low-carbon world.

All that said, there’s no denying that some fossil fuel jobs pay better than the average clean energy job. According to the Bureau of Labor Statistics, the average annual pay for workers in fossil fuel power generation is about $86,000, and in oil and gas drilling more than $82,000. (Those averages are elevated by the six-figure salaries for executives and managers, and job security for oil and gas workers is at the mercy of the boom-and-bust cycle.)

How can clean energy jobs become more competitive with the highest-paying fossil fuel jobs? Again, unions are the key.

Closing the union gap

The Bureau of Labor Statistics says that overall, union workers earn 16 percent more than non-union workers, and the Economic Policy Institute says workers covered by a union contract earn, on average, 11 percent more than their peers in the same industry. This union wage premium, which is even greater for Black workers, benefits all workers, because non-union employers must raise their wages and benefits to attract and retain the workers they need.

Clean energy lags behind many old-energy sectors in union membership – although not by as much as fossil fuel companies, their congressional allies and some union leaders suggest.

The energy and employment report says 17 percent of workers in the so-called TDS sector – transmission, distribution and storage of electricity, mostly generated from fossil fuels and nuclear – belong to a union. That’s the highest share in all energy sectors and almost triple the national average for all private sectors. But of workers in fuels production, only 3 percent in natural gas, 2 percent in oil and 1 percent in coal are unionized.

In clean energy sectors, energy efficiency is the most heavily unionized, at 10 percent of workers. Union membership in renewables averages less than 6 percent, although the 17,000 union workers in solar and wind are slightly more than the number in natural gas and the combined number in coal and nuclear.

* Includes transmission, distribution and storage of electricity from fossil fuels (59 percent in 2020), nuclear (20 percent) and renewables (20 percent)

Source: EWG, from the 2020 U.S. Energy and Employment Report

The more significant union gap is between all private sector jobs and all jobs in the public sector. About one in 16 workers in private industry belong to a union, but more than one in three public sector employees do. By designating taxpayer-funded clean energy projects as public works projects, Biden and other decision makers could help ensure that the resulting jobs would be well-paid union jobs.

“It’s much easier to put in wage requirements and labor agreements” in the public sector, J. Mijin Cha, assistant professor of urban and environmental economics at Occidental College, told The New Republic. “If we think about doing really big public projects, doing as much [as possible] through the public sector is best for job standards and job quality.”

Under the Davis-Bacon Act of 1931, the secretary of labor stipulates prevailing wages for various classes of workers. Those wages vary by state, based on construction wages for federally funded projects in that state. According to the Labor Department, 27 states and Washington, D.C., have passed prevailing wage statutes for public works projects that establish their own levels of prevailing wage and projects cost threshold levels.

Prevailing wage laws by state

Source: EWG, from U.S. Department of Labor

Biden is also committed to raising union membership in the private sector. He supports the Protecting the Right to Organize Act, which passed the House in March. The Washington Post says it would guarantee thousands of workers the right to organize and penalize corporations for violating labor laws. During the presidential campaign, Biden also pledged to steer federal contracts away from businesses with a record of anti-labor practices.

“As America works to recover from the devastating challenges of [the] deadly pandemic, an economic crisis and reckoning on race that reveals deep disparities, we need to summon a new wave of worker power to create an economy that works for everyone,” Biden said after the PRO bill passed the House. The New York Times called it “the most significant enhancement of labor rights since the New Deal.”

States are also setting policies that encourage higher pay and unionization for clean energy jobs.

California, which has more clean energy jobs than anywhere else in the U.S., mandates that renewable energy projects pay workers the prevailing wages and benefits set by the state, also based on the local union rate.

Maine’s state-level Green New Deal mandates that an increasing percentage of clean energy workers must be apprentices under the Department of Labor’s registered apprenticeship program, putting unions in a strong position to acquire those jobs. The Maine AFL-CIO endorsed the bill, and Matt Schlobohm, its executive director, told Vox: “We know that the energy transition is coming. It either happens to us, or with us, and we think ‘with us’ is a much better process.”

But the burden of finding common cause doesn’t lie only with unions. To gain labor’s support for the transition, clean energy industries must also embrace unionization.

In an analysis of the perception that clean energy is anti-labor, Kate Aronoff of The New Republic wrote:

Clean energy companies can certainly do much better by their workers . . . The fact that they’re producing clean power instead of digging up fossil fuels doesn’t make them any less likely to exploit their workers. Renewables companies are, after all, companies with a profit motive just like any other and have seen their most rapid growth after decades of assaults on organized labor through public policy. 

Conclusion

Organized labor is in a strong position to take advantage of the inexorable transition to clean energy. Not only is skilled labor an essential component of the deployment and maintenance of clean energy technology, but a critical shortage of skilled labor is looming – an opening for the extensive training networks unions already have.

Labor’s skepticism of the shift from fossil fuels is understandable, but the evidence is clear that the transition is creating and will continue to create living-wage jobs. The Biden administration, congressional leaders and state governments have committed to policies and legislation to support displaced workers and increase union membership in clean energy sectors. Labor leaders should show support for these initiatives, but clean energy leaders must also embrace unionization and commit to raising wages and benefits.

EWG enthusiastically advocates for the transition to clean energy as quickly as possible. We also stand with labor in working to ensure that the transition does not leave behind workers displaced from fossil fuel jobs. We look to a future where clean energy is fairly and equitably provided to all Americans, through networks that value skilled workers as the essential workers they are, resulting in a clean energy economy generated and delivered by workers whose rights to organize to secure living wages and benefits are fully protected.  

[1] That’s a smart bet: The Motley Fool reports that solar stocks returned 235 percent last year – 14 times better than the stock market as a whole.

[2] Using MIT’s Living Wage Calculator, EWG calculated that the national average for a living wage is currently $16.77 an hour.