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Getting the Lead Out: Employment & Economic Impacts of Lead Service Line Replacement

Summary:

Based on the Biden administration’s plans to invest $45 billion to replace 100 percent of lead service lines in America, the findings from Getting the Lead Out: Employment & Economic Impacts from Replacing America’s Lead Service Lines, this report from E2 and the United Association of Union Plumbers & Pipefitters (UA) estimates that the $45 billion invested in this program will create and support 56,080 jobs annually for 10 years, or a total of 560,800 job-years. This annual estimate includes 26,900 direct jobs—construction workers, plumbers, pipefitters, heavy equipment operators—as a direct result of this activity. Another 13,600 jobs that last for 10 years are created throughout the value chain, and 13,800 jobs are created each year for 10 years as a result of workers spending their paycheck.

About 84 percent of all jobs created through this investment are in construction (52 percent), professional and business services (24 percent), and manufacturing industries (8 percent). Insofar as the bulk of these jobs involve high-skill construction occupations, the jobs created will provide good wages and training opportunities for local residents and promote economic benefits to affected communities.

This investment into cleaning up our nation’s water supply also would generate $38.3 billion in labor income, $11.7 billion in taxes, and $53.9 billion in additional value to the economy. That would represent a 120 percent return on investment.

In addition to the jobs created and value added to the economy from this activity, additional benefits like increased positive health outcomes would be generated. It has been estimated that an additional $22,000 of societal benefits are generated for every lead pipe replaced as a result of lower cardiovascular disease. Since in many areas lead service lines are more likely to exist in environmental justice communities, and since Black and Latino children have disproportionately high overall lead exposure, replacing these lead pipes will also greatly benefit low-income and minority households.

The scope of this work is massive and reaches every state. The Natural Resources Defense Council (NRDC) estimates that between 9.7 million to more than 12 million lead service lines are distributing water throughout our nation. About 700,000 or more of these service lines are found in Illinois, while Ohio, Michigan, New York, New Jersey Missouri and Wisconsin each contain more than 300,000 of the nation’s lead service lines; the top ten states total about 4 million.

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Findings

• 560,800 total job-years*
• $104 billion: total economic activity generated
• 10 million lead service lines that need to be replaced

^{* 56,080 jobs annually over ten years}

^{** Includes $38.3B in labor income, $11.7B in taxes and $53.9B in additional economic benefits}

Methodology

BW Research used IMPLAN to conduct the economic impact analysis, resulting in the jobs, value-added, labor income, and taxes data. IMPLAN is an input-output modeling software that tracks spending patterns through the economy and their resulting impacts on economic indicators. The cumulative effects of the initial investment are quantified, and the results are categorized into direct, indirect, and induced effects. To capture interstate flows, direct and indirect impacts are results of national-level multipliers, distributed across states using state-level modeling. Induced impacts are the results of state-level multipliers, so as not to overestimate the impacts of household spending. Workforce data such as occupational demographics and wages are derived from JobsEQ by Chmura. JobsEQ is a workforce data software that derives data from Bureau of Labor Statistics and Census Bureau data, among other sources. Unionization rates are derived from unionstats.com.

• Direct Impacts show the initial change in the economy associated with the investment. For example, pipefitters installing new service pipes or engineers planning the replacement.
• Indirect Impacts include the supply chain responses as a result of the initial investment (i.e., water pipe manufacturers).
• Induced Impacts refer to household spending and are the result of workers who are responsible for the direct and indirect effects spending their wages (i.e., direct and indirect workers spend income on clothes, food, healthcare, etc.).
• Labor Income includes all forms of employment income, such as employee compensation (wages and benefits) and proprietor income (i.e. payments received by self-employed individuals and unincorporated business owners). Labor income is a component of value added.
• Value Added is defined as the total value of production after netting out intermediate goods. This is another term for GDP.

About this Report

This economic impact analysis was conducted by BW Research Partnership for E2 in partnership with the United Association of Union Plumbers and Pipefitters. It uses the Biden Administration’s stated goal of 100 percent removal of lead service lines (LSLs) from America’s drinking water systems, the Natural Resources Defense Council’s (NRDC) national survey of LSLs, and the Environmental Protection Agency’s (EPA) estimated LSL replacement costs.

Special thanks to NRDC and BW Research. For a description of the methodology used in this report, please refer to the explanation on page in Appendix A.

Looking for More Info?

If you are looking for additional insight into Getting the Lead Out: Employment & Economic Impacts from Replacing America’s Lead Service Lines or E2’s other clean energy employment reports, visit e2.org/reports.

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PROTECTING THE ECONOMY, CREATING NEW JOBS, AND DRIVING GROWTH

Michigan has for decades underinvested in its water infrastructure at the expense of the economy and the health of families in the state. To ensure Michigan’s economy continues to grow — and that all Michiganders enjoy a high quality of life — this gap should be closed.

Fortunately, investing an additional $12.2 billion in Michigan’s own water infrastructure needs on top of existing expenditures would over the next two decades help create nearly 90,000 direct job-years in multiple industries — including good jobs for veterans — while generating about $441.3 million in additional earned income for state residents annually.

This essential spending would also help businesses in the state’s water services industry become national leaders in developing and commercializing new water technologies, just as early-mover states like California have become national leaders in clean tech. And it would ensure that all Michigan industries, whether they are directly or indirectly reliant on clean, affordable water, are in the best position possible for decades of ongoing growth.

But first, we must fix the system.

REPORT TOPLINES

• $12 billion in new spending is needed to update critical water infrastructure in Michigan and avoid more long-term economic and health damage to the state
• New expenditures directly lead to the creation of 89,880 full-time job-years
• Those 90,000 direct jobs would generate $8.8 billion in new wages workers and their families can inject into their local economies
• New jobs and wages will generate $694 million in total tax revenue over two decades, with more than 80 percent going to local and state municipalities ($560 million)
• Michigan is currently spending $22,000 a day on bottled water for Flint, Michigan alone. Continuing to underfund and defer critical maintenance improvements to water systems across the state risks similar impacts in other cities.
• While the cost of improving Michigan’s safe drinking water systems is greater than the direct economic benefits, this report focuses only on one small piece of the economic benefits – the direct additional jobs and spending. E2 and BW Research did not analyze indirect or induced benefits like improved health outcomes for citizens, long-term benefits on younger populations, and economic activity created by improving clean water access for businesses.

METHODOLOGY

For the jobs, income and tax revenue data, E2 contracted BW Research which used the Emsi Input-Output model that traces spending and infrastructural developments through the economy to determine the economic impact of the change in water infrastructure spending in the state of Michigan.⁴⁵

The cumulative effects of the initial job change are quantified and the results are categorized into direct, indirect and induced effects.

• Direct effects show the change in the economy associated with the initial job creation (or loss), or how the industry experiences the change (i.e., workers digging ditches to replace pipe).
• Indirect effects include all the backward linkages, or the supply chain responses as a result of the initial job change (i.e., water pipe manufacturers).
• Induced effects refer to household spending and are the result of workers who are responsible for the direct and indirect effects spending their wages (i.e., direct and indirect workers spend income on clothes, food, healthcare, etc.).

DOWNLOAD

The complete report is available for download at this link.

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