Sizing the Clean Economy

The following guest post was written by Mark Muro, Senior Fellow and Policy Director of the Brookings Institution’s Metropolitan Policy Program.

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For all the debate, speculation, and controversy that has surrounded the hoped-for growth of the so-called “clean” economy and “green jobs” one thing has been in pretty short supply: facts. Hard to define and measure, the clean economy has remained as elusive as its promise has been alluring.

For all the talk the clean or green economy remains an enigma, in large part due to the continued absence of standard national definitions and data.

Which is why my group at the Metropolitan Policy Program at Brookings last week released a new report assessing the current nature, size, and growth of the “green” or “clean” economy in U.S. regions.

Developed in partnership with Battelle’s Technology Partnership Practice, our report and its underlying database—entitled “Sizing the Clean Economy”–are not perfect accountings. Still, I think you will agree they offer a compelling new national and metropolitan look at a sector of the economy that has remained at once an important aspiration and a frustrating enigma. (You can check out the live webcast of our recent event on this here, and play with the special interactive mapping tool we’ve developed here).

What have we done and what have we found? Basically, we at the Metro Program have worked with Battelle over the last 18 months to develop, analyze, and comment on a detailed database of establishment-level employment statistics pertaining to a sensibly defined assemblage of low-carbon and environmentally oriented industries in the United States and its metropolitan areas, ranging from hot “cleantech” segments like the solar photovoltaic industry and the fuel cell industry to lass glamorous, “mature” segments like waste management.

Covering the years 2003 to 2010 for larger U.S. metros, the resulting information provides a new source of timely information that is both consistently applied across regions but detailed enough to be of use to inform national, state, and regional leaders on the dynamics of the U.S. low-carbon and environmental goods and services super-sector as they are transpiring in U.S. regions. To be sure, localized drill-downs in particular places may capture a fuller profile in some regions. But overall, our new information provides what we believe is a plausible, useful, first-of-its-kind measure of the size and growth of the clean economy as it is occurring in the nation’s 100 largest metropolitan areas. What is more, our definition, approach, and data have been structured as much as possible to anticipate the Bureau of Labor Statistics’ own forthcoming “green jobs” count, due next year at somewhat broader levels of geography. It’s time that all U.S. regions begin to have access to some at least rough order-of-magnitude facts about the size and shape of their clean economies.

As to what we have learned from this exercise, our analyses of the new data suggest a series of intriguing findings. In this fashion, “Sizing the Clean Economy” concludes that:

  • The clean economy—which employs 2.7 million workers—encompasses a significant number of jobs in establishments spread across a diverse group of industries. Though modest in size, the clean economy employs more workers than the fossil fuel industry and bulks larger than the bioscience industry but remains smaller than the powerhouse IT-producing sectors
  • The clean economy grew more slowly in aggregate than the national economy between 2003 and 2010 but newer “cleantech” segments produced explosive job gains. Overall, today’s clean economy establishments added half a million jobs between 2003 and 2010, expanding at an annual rate of 3.4 percent. This performance lagged the growth in the national economy, which grew by 4.2 percent annually over the period (if job losses from establishment closings are omitted to make the data comparable). However, a bundle of newer “cleantech” establishments–especially those in young energy-related segments such as wind energy or smart grid—expanded at more than 8 percent a year, more than twice the national growth rate, albeit from small bases
  • The clean economy is manufacturing and export intensive. Roughly 26 percent of all clean economy jobs lie in manufacturing establishments, compared to just 9 percent in the broader economy. On a per job basis, establishments in the clean economy export roughly twice the value of a typical U.S. job ($20,000 versus $10,000).
  • The clean economy offers more opportunities and better pay for low- and middle-skilled workers than the national economy as a whole. Median wages in the clean economy—meaning those in the middle of the distribution—are 13 percent higher than median U.S. wages. Yet a disproportionate percentage of jobs in the clean economy are staffed by workers with relatively little formal education in moderately well-paying “green collar” occupations
  • Most of the country’s clean economy jobs and recent growth concentrate within the largest metropolitan areas. Some 64 percent of all current clean economy jobs and 75 percent of its newer jobs created from 2003 to 2010 congregate in the nation’s 100 largest metro areas
  • Clusters accelerate growth. Finally, clean economy establishments located in counties containing a significant number of jobs from other establishments in the same segment grew much faster than more isolated establishments from 2003 to 2010. Overall, clustered establishments grew at a rate that was 1.4 percentage points faster each year than non-clustered (more isolated) establishments. Examples include professional environmental services in Houston, solar photovoltaic in Los Angeles, fuel cells in Boston, and wind in Chicago

In short, the measurements and trends presented in our report offer a mixed picture of a diverse array of environmentally oriented industry segments that is growing modestly or even rapidly despite market and policy adversity and in ways that are producing–but not as fast as might be hoped for–a balanced, desirable array of jobs including in manufacturing and export-oriented fields.

In that sense, the measurements, trends, and discussions offered here provide an encouraging but also challenging assessment of the ongoing development of the clean economy in the United States and its regions.

In many respects, the analysis warrants excitement. As the nation continues to search for new sources of high-quality growth, the present findings depict a sizable and diverse array of industry segments that is—especially in cleantech—expanding rapidly at a time of sluggish national growth. With smart policy support broader, even faster growth seems possible. At the same time, however, the information presented here is challenging, most notably because the growth of the clean economy has almost certainly been depressed by significant policy problems and uncertainties that we will write about in the coming days. Those problems—weak policies to promote demand “pull;” shaky finance provisions; inadequate innovation efforts—seem in fact to be accumulating rather than receding or being taken care of.

In that sense, what is most challenging about our new work is the fundamental question raised by the dynamic growth but modest size of vibrant cleantech segments of the clean economy. That question is: Will the nation marshal the will to make the most of those industries? Or will it leave them to fend for themselves?

Download the full report from the Brookings Metro Policy Program.

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