Direct, Indirect, Induced – Jobs, Jobs, Jobs

Mark Green
Posted January 22, 2014

While I haven’t had a chance to fully digest the Center for American Progress’ latest attempt to spin for new energy taxes, I’m curious about its dismissal of indirect and induced jobs as the measure of an industry’s investments and operations. Direct/ indirect/ induced jobs isn’t some foreign concept, as we’ve noted before, but perhaps CAP would understand it better if we used a different example than the oil and natural gas industry:

There are three sources of job creation associated with any expansion of spending—direct, indirect, and induced effects. For purposes of illustration, consider these categories in terms of investments in home retrofitting or building wind turbines:

Direct effects - Construction jobs created by retrofitting buildings to make them more energy efficient, or manufacturing jobs created to build wind turbines;

Indirect effects - Manufacturing and service jobs created in associated industries that supply intermediate goods for building retrofits or wind turbine manufacturing, such as lumber, steel, and transportation;

Induced effects - Retail and wholesale jobs created by workers in these construction, manufacturing, and service industries when they spend the money they earn on other products in the economy.

The above is from a September 2008 CAP economic study calling for stimulus spending.

Now, if the folks at CAP need more explanation on indirect and induced jobs, they can revisit their own studies on conservation, infrastructure spending, the SNAP program, low-carbon employment, the Recovery Act, Arizona, etc. …