Some solar advocates talk about solar energy projects in terms of how many jobs are created. They say subsidies for solar create jobs. But what is not visible to the untrained eye is that subsidies also destroy jobs, and in sum, they are a net loss for the economy.
Who do you think pays for these subsidies? The answer is taxpayers and ratepayers pay for the subsidies given to the solar industry.
So what happens to these tax and ratepayers as they are forced to pay more in taxes and electric bills? Of course, they can now spend less in other segments of the economy. There is no free lunch. Their reduced spending will directly cause economic losses and job losses in the balance of the economy.
So on net, the solar subsidies just shift jobs from one activity to another. But we are worse off. The new solar jobs don’t have much economic value. If they did the market would have already employed people to install solar electric systems. But the jobs that were lost were more productive, since they were created by real demand. So on net, we shifted people from more productive activities to less. This causes lower overall economic output and lower aggregate wages.
Imagine a small island of 100 inhabitants. Assume they were all productive in gathering food, providing water, building homes, etc. Now assume the island government takes 10 workers out of the job force and makes them dig holes. The overall output of the island will drop by 10%. This means that there will be 10% less goods and services available. There are still 100 inhabitants, but now only 90% the output. So everyone has less. Either prices increase or wages decrease, but the result is the same. Everyone can now afford only 90% of what they could afford before the 10 workers were ‘redirected.’
This is very similar to what is happening with solar subsidies. Workers are moved from productive activities to less productive activities so overall output drops.
So the next time you hear someone say, this or that solar company employed 100 people, it is more accurate to see it as 100 productive workers are now unproductive and we will all have less goods and services to go around.
But it is easy to be fooled by the jobs myth. When the solar jobs are created, the number of jobs are easy to see and report in a news article. But when spending drops in the balance of the economy, the job losses are diffuse and difficult to count. You will see shirts with solar company logos, but no one laid-off in the restaurant business will wear a shirt that says “I lost my job do to solar subsidies.” But they did just the same.
The economic loss might be worth it if solar actually contributed to reducing CO2 or providing energy independence, but those arguments are just as flawed.