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Study: More MPG = More Jobs

The connection may not seem obvious but improving the miles per gallon of our cars spurs job creation. This is for two reasons: (1) improving automobile efficiency requires the addition of new technologies, which are designed and manufactured by adding workers in the auto industry and (2) money saved on gasoline by drivers will be spent on other goods and services, increasing jobs across the economy.

Job growth resulting from more efficient cars is confirmed in new study Gearing Up: Smart Standards Create Good Jobs Building Cleaner Cars by the BlueGreen Alliance and the American Council for an Energy Efficient Economy (ACEEE). The study finds that 570,000 jobs will be created across the United States by 2030 as automobile efficiency ramps up. The jobs are created primarily because consumers have more money to spend in the U.S. economy, the second effect described above. Instead of buying gasoline that comes from imported oil, drivers of more efficient vehicles go to the pump less and spend their saved money on other items. Within the auto industry, the study finds 50,000 jobs are created because more content is added into each vehicle.

The BlueGreen Alliance – ACEEE study forecasts jobs based on the Obama Administration’s proposal to strengthen automobile fuel economy and carbon pollution standards for model years 2017 to 2025 to the equivalent of 54.5 mpg. Researchers used the fuel savings estimated by the U.S. Department of Transportation and U.S. EPA for the standards as inputs to a macroeconomic model to calculate jobs created in 15 sectors of the economy. The BlueGreen Alliance – ACEEE findings support similar estimates from a July 2011 report by investor group Ceres that considered a range of possible fuel efficiency improvements before the actual proposal was released. In both studies, the baselines include the existing 2012-2016 standards that reach the equivalent of 35.5 mpg so a jobs analysis that covers the full set of existing and proposed standards from 2012 to 2025 would find numbers higher than those discussed here.

Jobs in the U.S. auto industry are already on the rise. The BlueGreen Alliance – ACEEE report notes that since a seasonally-adjusted trough in June 2009, the auto manufacturing and sales industry has added 219,000 jobs.

The new jobs are being added as consumer choice in fuel-efficient vehicles is growing thanks to fuel-efficiency standards. In just three years, the number of new fuel-efficient cars, minivans and crossovers in showrooms has doubled.

About one third of 219,000 jobs added since 2009 are related to auto dealers yet the National Automotive Dealers Association (NADA, the national lobbying arm for dealers) is inexplicably opposed to the proposed 54.5 mpg standards. NADA should be embracing the standards because dealer profits are up as fuel-efficient models grow to meet consumer demand. The proposed 2017-2025 standards will continue the upward trend in auto efficiency that saves consumers money.

The opportunity to save money by driving a more efficient vehicle is likely to increase overall new vehicle sales, which would increase dealer revenues and manufacturing jobs. The BlueGreen Alliance – ACEEE report finds that a 4% sales increase could add another 19,000 jobs in 2030.

The connections are clear. Better auto efficiency equals more jobs across the economy. Under vehicle efficiency standards we will send less money overseas to buy oil and instead invest in the U.S. and strengthen our economy.

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