Faced with the second-highest unemployment rate in the nation - 12.2 percent as of February - California needs businesses that will quickly create new jobs. Employment in state businesses that directly provide green goods and services (GGS) grew 56 percent from 1995 to 2009. These jobs are often seen as the path back to prosperity, but are they, really?
Green businesses still account for a small fraction of the state economy at just 3.4 percent of total employment, according to the California Green Economy Survey, by the California Employment Development Department in January 2010. Making this figure even less significant is the fact that this survey of employers revealed that 39 percent of their workers spent less than half their working hours performing "green work." The survey also used a broad definition of green jobs, counting every single job involving "green activities" in all businesses, not just those that directly provide GGS.
Job substitution is another issue. Of the green jobs in the survey, how many are existing jobs where production and practices have become greener, and how many are new jobs? The answer depends on two factors: 1) Does providing GGS require more workers to be involved, and does it require changes in a worker's skill level? 2) Do consumers simply substitute GGS for more traditional alternatives, or are GGS new items on the shopping list? Overall employment is not likely to rise unless the pie grows bigger.
In recent years, job creation has been at the top of the list of justifications for green businesses to receive public subsidies and tax credits. Unfortunately, there is no consensus yet on the definition of green jobs or a coherent, consistent way of counting them. (The Bureau of Labor Statistics only began collecting national green-job data in 2010, using two definitional approaches). As a result, the job-creating potential of green businesses is mostly guesswork. Albeit some are more informed than others, the truth is no one really knows.
Make no mistake. We need a greener economy to build a sustainable future, and one day green businesses may collectively become the largest employer in the Golden State. However, this is a long-term goal, and green jobs are by no means a short-term fix to the pressing issue of unemployment. Infrastructure investment that generates jobs quickly is a more effective stimulus.
To achieve the long-term goal, we need more employment overall right now to drive the tax revenue that will allow the state to provide R&D incentives to invent and truly commercialize GGS. The worst-case scenario would be to direct public money to the green businesses whose products or services have little market competitiveness and whose employment cannot self-sustain without taxpayers' continuous support.