In theory, lower taxes make it possible for corporations and investors to invest in businesses like manufacturing and thus create jobs. When energy is factored into the picture, however, questions arise.
In manufacturing — the only sector where high-school-educated people could traditionally earn a middle-class income — human labor is becoming less and less of a factor in production costs. Having moved operations to low-wage countries, corporations are now investing in robotics and automation, gradually eliminating the need for traditional production labor altogether. Intelligent machines have begun to threaten jobs of all kinds, and already heavily mechanized manufacturing is by far the easiest field to robotize. The ultimate outcome will be a drastically reduced workforce — no payroll to meet, no overtime, no negotiated labor contracts, no worker benefits to pay. Even the whole human resources department might be eliminated.
The cost of energy to run the machines is a pittance compared to these worker-related expenses. Also, machines don’t tire, are less prone to make mistakes, and need no time off for rest, illness, or — heaven forbid! – a vacation. Meanwhile, corporate taxes as a share of federal income have been declining.
All this amounts to a profit windfall for corporations and their shareholders. This windfall is unlikely to be spent on creating jobs; more likely it will be spent on robotization, exchanging human labor for the programmed use of energy.
Given these likelihoods, wise tax reformers honestly intent on creating middle-class livelihoods should consider taxing the corporate windfall of robotization and spending the proceeds creating jobs in fields more promising than either manufacturing or conventional fossil energy.
Research shows that spending $1 million on education will generate about 26 jobs, more than double the 11 jobs that would be created by spending the same $1 million on the U.S. military. Similarly, investing $1 million in renewable energy and energy efficiency will create more than 16 jobs, while spending it on the existing fossil-fuel infrastructure will generate only about 5.3 jobs.
Building a green U.S. economy generates roughly three times more jobs per dollar invested than maintaining the country’s fossil-fuel dependency. Therefore, employment and tax policies should focus on changing our priorities for economic growth: expanding educational opportunities across the board and building a green economy, while contracting both the military and the fossil fuel economy.
Workers in the fossil fuel industry will face major job losses, but their total number is relatively small. In the U.S. today, about 65,000 people are directly employed in the coal industry, 12,840 in oil, and 82,125 in natural gas production. That’s about 0.1 percent of the 147 million total employment. In the context of the overall U.S. economy, a modest level of commitment could provide a just transition to these workers, and their families and communities.
According to a recent Stanford University report, Maine alone could create more than 13,000 permanent jobs by creating smart microgrids and by meeting our electricity demand with renewable energy. The transition would pay for itself in a mere 7 years from reduced energy and environmental costs.
(Paul Kando is a co-founder of the Midcoast Green Collaborative, which works to promote environmental protection and economic development via energy conservation. For more information, go to midcoastgreencollaborative.org.)