Updated: Green Jobs and the Perils of Central Planning

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The Wall Street Journal has a useful editorial today on a "green jobs" training debacle.  The feds allocated $500 million (that's half a billion) to train 125,000 individuals for careers in "green jobs."

So far only 53,000 have been trained.  Of those, only 8,035 have found work.  Of those, only 1,033 were still on the job after six months.

Meanwhile, The Grand Forks Herald is reporting that Minnesota-based Arctic Cat "said the company’s Thief River Falls plant is not operating at full capacity because of a shortage of workers."

What's the connection?  The difference between market forces and central planning.  The market, represented by Arctic Cat, is indicating that more snow-mobile workers are needed.  Central planners would rather provide "green" workers.

As it happens, I have some first-hand experience with this phenomenon.  As head of Minnesota's Office of Energy Security, we were the recipients of $138 million for the state's Weatherization Assistance Program from the federal stimulus monies.  The state had run a successful Weatherization program since the 1970's, insulating the homes of low-income residents throughout Minnesota.  The $138 million represented about 13 times the usual annual allocation, creating the classic "pig-in-a-python" problem.  The $138 million also represented the bulk of the approximately $200 million in "green energy" federal stimulus funds we received in 2009.

Outside boosters thought that this was just the start of a green jobs revolution.  A typical quote from the time,

"I think the demand for those skills is going to continue to grow, I think that the more energy conscious and more energy technical skills that people acquire, there's going to be a need from here on out for the next century."

Events would prove otherwise.  One year down range, we had weatherized only 2,700 homes, 16 percent of the goal (from the stimulus funds, the regular program continued to produce as usual).  You won't believe the reason why,

"Weatherization work was delayed because it took a long time for the federal government to determine what wages weatherization workers needed to be paid to meet stimulus requirements," reported Minnesota Public Radio.

That's right.  The feds gave us $138 million, but needed sixth months to determine how much these "green jobs" should be paid.  The feds first needed to create a new job category of "weatherization worker" and then determine the proper "Davis-Bacon" (union equivalent) wage for all 87 Minnesota counties.

Another year down range, and the Weatherization program had completed 13,000 homes, 76 percent of the goal.  But as the extra money is used up, what will be the future of all the new workers taken on?  Will the government, with all the red-tape baggage, have guessed correctly?  Early returns are not so good,
especially, when actual jobs (like those in Thief River Falls) go begging.

The government estimates that in two years, the $138 million pledged has "created or retained 570 direct jobs."  That works out to around $240,000 per job.  Perhaps, as the remaining work is completed, a few more jobs will be created or retained.  To be sure, Minnesota has produced much better results than other states.

People's livelihoods are at stake.  Who do we trust to make the right decisions?

Update:  As predictable as day following night, as the Weatherization money runs out, the wailing and gnashing of teeth begins.

From the Winona Daily News: "Weatherization program funding much lower, may be cut altogether"

From Minnesota Public Radio:  "Supporters want to continue funding to weatherize low-income and rental homes"