Friday, January 13, 2012

How much does a ‘Green Job’ cost?

How much does a ‘Green Job’ cost?

I have read it cost as much as $2,000,000 per job to fund the Solyndra fiasco.  Not a good investment in my opinion and investments like this should not be made by government.  Government needs to make investments much the same way private industry does.  It must make good economic sense or it should not be funded in the first place.  

My concern with these ridiculous programs that waste $2,000,000 per job is they are only the headlines.  They are not the real story behind ‘green Jobs’.

My company, Energy Independent Solutions (EIS), creates ‘Green Jobs’.  We did not receive a bailout like the banking industry and we did not receive any government backed or subsidized grants or loans like Solyndra.  We built the company like any other small business, with private capital, hard work and lots of long hours.  

EIS doesn’t receive any direct subsidy, but our solar clients do and this benefits our business.  So we are in fact indirectly subsidized.  How many dollars/job much does the government subsidize EIS job creation?  Let’s take a look.

Most of our clients participated in the PA Sunshine program which is nearly out of money and currently on life support.  The average residential customer received a $7,500 rebate or subsidy from the state of PA for their average $51,000 project.  Of this $51,000 there were several taxable or fee generating events.  We built roughly 65 of these projects this year in Western PA, so let’s see what the real numbers are, beyond the headlines and sound bites.

Total project costs:                                          $3,315,000
Total State Subsidy:                                        $487,500
Total estimated taxes paid,        
including sales tax,
payroll taxes,
and income taxes:                                           $703,377

Total Govt Fees including Permits,
State grant Fees, Inspection Fees etc.    $72,378

To summarize, the State of PA stimulated the PA Solar market with $487,500 of PA tax payer money.
This subsidy stimulated $3,315,000 in private investment which went into payrolls, equipment, materials, permitting and other miscellaneous expenses related to a construction project. 

The Government then TAXED the project through sales tax, payroll tax, income tax etc. for an estimated $703,377 recouping over 100% of the invested subsidy immediately.
The Government also levied fees on each construction project via permits, inspection fees, grant fees etc. for an estimated additional $72,378.  
The PA Sunshine program indirectly funneled approximately $487,500 to my company, which created roughly 15 jobs, or $32,500 per job.  This created over $775,000 of additional tax revenue, or $51,650/job which gave the government a net job cost of NEGATIVE $-19,150/job.  In other words the government recovered an additional $19,150 of tax revenue above their investment for each job they created.  This is a good investment and one I would make with my business.
This is a simplistic look at the financial cost and impact of ‘Green Jobs’.  In order to get a real picture of the impact, we need to look deeper.  We buy our panels and components from distribution centers who employ local truckers, warehouse workers, salesmen etc.  We buy our trucks and equipment locally then have them serviced locally.  Our wire and racking are made locally the payroll is spent locally.  Our crews eat lunch and fuel vehicles locally.  
The ripple effect of green jobs is like that of any other field.  It is not just my 15 jobs, we feed 2-3 times as many more jobs in the community with the same private capital being invested into solar panels.  According to the Cato Institute, a dollar of payroll is taxed four times as it filters through the economy.

1 comment:

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