The Inflation Reduction Act is here. So what's next for employers?

In August, the US Senate passed the Inflation Reduction Act, and it’s expected to continue through the House and be signed into law by President Biden. While it tackles a number of issues from healthcare to inflation, it’s getting plenty of attention for its greener initiatives. Once law, the bill will pledge $369 billion to invigorate a new Green Economy. This is the Unites States' largest investment in clean energy and combating climate change.

So what does this new legislation mean for employers?

Jobs and the Inflation Reduction Act

Some eco-experts are predicting the Inflation Reduction Act could cut US emissions by 40% by 2030 (others are putting it closer to 14%). While almost everyone agrees that the investment in clean energy, solar and wind manufacturing, and electric cars will make an impact in the US economy, the exact numbers are harder to pin down.

The Clean Power Association predicts that the clean energy industry itself will triple and the number of US workers it employs will double. Their report finds that 550,000 jobs will be created in the clean energy sector as a result of the new legislation.

Energy Innovation, a public policy firm, released its analysis of the bill: Once construction and service industries are considered as well, the estimate rises to 1.5 million new jobs by 2030.

And yet another study making waves says the reality is 9 million jobs over the next decade.

While manufacturers and many other employers are focused on the clean energy production and investment tax credits, the automotive industry is focused on a different provision in the Inflation Reduction Act: changes to the tax credits for drivers buying electric vehicles. The bill hopes to encourage US production of EV cars and batteries, so tax credits will only apply to vehicles that meet certain domestic sourcing and production requirements. The Alliance for Automotive Innovation says that it could leave 70% of electric vehicles ineligible for the tax credit, which could be very harmful to the industry in the short term. 

Clean energy was already creating more jobs

This isn’t the first government initiative to spur the creation of clean energy jobs. As climate change continues to be a hot topic globally and more laws are drafted, soon businesses might be punished for not going green.

One industry that especially benefits from going green is the manufacturing sector. New technologies are created every year to help our planet – and jobs are needed to help produce these. On top of this, clean energy manufacturing jobs are emerging as some of the most advantageous positions available in the market.

The World Economic Forum expects that the shift to clean energy will generate 10.3 million jobs by 2030.  Even though this transition will cause 2.8 million jobs to be lost in oil and gas industries, this change will add 8 million more jobs to the American jobs market.

The Brookings Institution, a non-profit research organization, recently published an in-depth review of clean energy jobs. In it, they identified a whopping 320 unique occupations created by the clean energy economy. These hundreds of jobs comprise three newly created sectors: clean energy production/manufacturing, energy efficiency, and environmental management. In addition to producing wind turbines, batteries, electric vehicles, and new technologies, this growth will include producing more energy efficient products, including home appliances and construction materials.

Clean energy is an opportunity for more diversity

In addition to adding more jobs to the US economy, clean energy is producing more equitable ones. The Brookings Institute found that those working in clean energy earn higher and more equitable wages when compared to the national average.  Mean hourly wages surpassed the national average by 8 to 19%. And more equitable wages aren’t just for those at the top. Employees at entry-level positions can earn $5 to $10 more per hour than in other jobs with similar conditions.

That leads to one concern about the Inflation Reduction Act: It will only benefit certain demographics of the workforce. According to the US Department of Energy, just 25% of workers in energy are women. (In construction, another industry that will benefit from the legislation, women make up only 4%.) While more women took on jobs in the trades in 2021, these demographic gaps mean that men are more likely to have access to these higher salaries.

For employers, this means a great opportunity to diversify their workforce if they rethink their hiring process. Currently fewer than 17% of clean energy workers hold a 4-year bachelor’s degree, suggesting such degrees aren’t needed to secure these well-paid positions. This can also help improve racial diversity as minorities are far less likely to possess college degrees when compared to their white counterparts. 

In fact, 45% of clean energy workers have no education beyond high school as clean energy relies heavily on skills training. And with online skills training on the rise, including Adecco’s Aspire Academy, people from diverse backgrounds can access the education they need to get their start in clean energy. By training your own workers you’ll not only ensure the skills your business needs are learned but also mine untapped talent pools – a hard feat in this tight labor market. 

We understand clean energy

As climate change dominates the headlines, lawmakers continue to react, and consumers change their buying habits, your business will need to adapt. This can be a challenge, especially as the job market continues to surprise and new legislation, such as the Inflation Reduction Act or the recent Chips and Sciences Act, change the industry landscape. 

Luckily, emerging industries, such as clean energy and manufacturing, allow for more inclusive hiring and skills training, and at Adecco, we will not only help you find these diverse candidates but guide your business in how to upskill them.

Contact us today to see how we can help.