How many jobs is the Inflation Reduction Act spurring? A lot

The Inflation Reduction Act will create a lot of new construction jobs for people building the electric-vehicle and battery factories and the wind and solar manufacturing and generation projects spurred by the law’s hundreds of billions of dollars in tax credits and incentives.

Plenty more jobs will be created at those sites once construction is complete. And the IRA will spur ​“indirect” jobs at companies that supply the new facilities with goods and services, as well as ​“induced” jobs tied to these workers spending their wages within local economies.

So says a new report from E2 (Environmental Entrepreneurs) that tallies employment expected to be triggered by 210 major clean-energy projects announced in the first 12 months after the law’s passage. The analysis finds that these projects will spur a total of 303,500 jobs each year over a typical five-year construction phase, and a total of another 99,600 jobs each year after that in their long-term operations.

“This report basically reinforces the fact that we’re in the biggest economic revolution in generations, thanks to the IRA and its policies,” said Bob Keefe, executive director of E2, a nonpartisan clean energy advocacy group of business leaders, investors and professionals. ​“The economic boom extends well beyond solar panels and wind turbines, to everything from local construction companies to restaurants to real estate, and many other sectors of the economy.”

By way of comparison, the 303,500 jobs expected during these projects’ construction phases is roughly equivalent to the total number of firefighters employed across the country, he said. The wages of workers involved in this phase are projected to add up to $111 billion over five years.

The report — compiled by BW Research Partnership, which also produces the annual U.S. Energy & Employment Report for the Department of Energy — forecasts that the jobs associated with these projects will add about $156 billion to the U.S. gross domestic product, boosting GDP by more than half a percent. The projects will also generate more than $32 billion in tax revenue for federal, state and local governments over a five-year period.

The new report builds on a jobs analysis E2 released in August to mark the one-year anniversary of the Inflation Reduction Act. That analysis forecast at least 74,181 new jobs and $86.3 billion in private investments linked to 178 of the 210 announced projects, the ones that included hard numbers on employment and investment.

The new report adds extrapolated job and economic-impact data for the remaining projects.

The E2 report joins a growing number of forecasts and estimates of the employment growth being spurred by the law’s passage. The BlueGreen Alliance, a nonprofit representing labor unions and environmental organizations, commissioned an analysis last year that forecast the Inflation Reduction Act would lead to 9 million new jobs over a decade. Climate Power, a nonprofit climate advocacy group, reported in July that more than 170,000 clean-energy jobs had already been ​“announced or advanced” thanks to the Inflation Reduction Act and the 2021 Bipartisan Infrastructure Law.

E2’s analysis differs from others because it’s based on ​“projects we absolutely know are tied to the IRA, either because the companies announce it, or because the credits or grants they’re applying for are specifically” from the law, Keefe said.

During the projects’ construction phases, assumed to last five years from project announcement to completion, the report estimates the creation of 142,300 direct jobs, 55,900 indirect jobs and 105,300 jobs induced by the direct and indirect workers spending their wages.

“We’re talking about electricians, pipefitters, construction laborers — but we’re also talking about a whole host of occupations, from the finance and insurance people to everything else,” Keefe said.

The long-term employment growth ​“once the doors open and the factories get humming” won’t be as large, but it will be more enduring, he noted. The report estimates that just under 100,000 jobs would be created in the first year of these 210 projects’ operations. Of those, 25 percent would be direct jobs, 35 percent would be indirect jobs supported through suppliers and services for those projects, and 40 percent would consist of induced employment.

“The thing about these jobs is that they’re just so widespread across the entire economy,” he said.

By far the biggest drivers of job and economic growth are the EV and battery sectors, Keefe said. About 58 percent of the capital investment E2 is tracking comes from EV facilities, and another 17 percent from battery storage, most of it to supply batteries for EVs. Smaller economic impacts are forecast for solar power, clean fuels, wind power, and electric transmission and distribution (T&D), as shown in this chart of the expected breakdown of capital investment during the construction phase. 

This data underscores the significance of the automotive industry, which plans to make about $210 billion in U.S. EV-related investments through 2030, according to analysis firm Atlas Public Policy. Massive new EV and battery factories are currently being built in the U.S., many of them concentrated in a ​“Battery Belt” stretching from the industry’s historic center in Michigan, Indiana and Ohio down to the Southern states of Kentucky, Tennessee, Georgia and the Carolinas.

This map shows data for individual projects E2 is tracking. (E2 plans to release state-by-state data in the coming months, Keefe said.)

There’s a political context to this report, according to Keefe. The Inflation Reduction Act was passed without a single vote from Republicans in Congress. But a majority of the investment spurred by the law is happening in congressional districts represented by Republicans.

“We hope that policymakers and lawmakers will see this and recognize it’s a bad idea to talk about rolling back these policies and programs that are driving so much economic growth directly — and, now we know, indirectly — in their districts, their communities,” Keefe said.