IEc
DRAFT:
May
2005
E­
1
Appendix
E
METHODOLOGY
FOR
EMPLOYMENT
IMPACTS
ANALYSIS
IEc
DRAFT:
May
2005
E­
2
Appendix
E
METHODOLOGY
FOR
EMPLOYMENT
IMPACTS
ANALYSIS
INTRODUCTION
The
HWC
MACT
replacement
standards
are
likely
to
cause
sectoral
shifts
in
employment.
As
some
combustion
facilities
find
that
it
is
no
longer
economical
to
continue
burning
hazardous
waste
in
some
or
all
of
their
systems,
workers
at
these
locations
may
be
displaced.
While
the
wastes
diverted
to
other
facilities
may
create
a
need
for
additional
staff,
economies
of
scale
and
current
capacity
utilization
in
the
hazardous
waste
combustion
market
suggest
that,
within
the
combustion
sector,
these
additions
will
not
offset
expected
dislocations.
Employment
gains
from
the
HWC
MACT
replacement
standards,
however,
are
likely
in
the
pollution
control
equipment
sector,
as
new
purchases
of
equipment
to
comply
with
the
MACT
replacement
standards
stimulate
additional
hiring.

In
this
appendix
we
present
the
methodology
for
calculating
the
employment
impacts
likely
to
result
from
implementation
of
the
HWC
MACT
replacement
standards.
In
the
first
section,
we
discuss
the
overall
framework
of
the
methodology
and
highlight
a
number
of
important
simplifications
we
made
in
analyzing
employment
impacts.
We
then
provide
detailed
discussions
regarding
the
methodologies
used
for
the
calculation
of
job
dislocation
and
job
gain
estimates.

GENERAL
FRAMEWORK
FOR
ANALYZING
EMPLOYMENT
IMPACTS
In
the
employment
impact
analysis,
we
evaluate
national,
primary
impacts
of
the
HWC
MACT
replacement
standards
within
the
hazardous
waste
combustion
sector
and
the
pollution
control
equipment
manufacturing
industry.
This
approach
is
based
on
a
number
of
assumptions
and
simplifications
that
are
detailed
below.
One
of
the
most
significant
simplifications
is
that
the
methodology
ignores
potential
secondary
spill­
over
effects.
For
example,
as
increased
demand
stimulates
additional
hiring
at
pollution
control
equipment
manufacturers,
the
employees
may
contribute
more
resources
to
the
local
economy
through
the
purchase
of
goods
and
services.
Such
purchases
may,
in
turn,
generate
additional
jobs.
At
the
same
time,
an
opposite
effect
may
occur
in
conjunction
with
job
dislocations
at
combustion
facilities,
as
displaced
workers
have
less
money
to
spend
within
the
local
economy.
It
is
important
to
note
that
many
of
these
potential
secondary
impacts
will
likely
be
transitory;
for
example,
the
secondary
impacts
of
employment
dislocations
at
combustion
facilities
will
decrease
as
workers
find
other
jobs.

Focusing
on
the
hazardous
waste
combustion
sector
and
the
pollution
control
equipment
industry,
we
do
not
calculate
employment
impacts
within
the
fuel
blending
sector.
We
do
not
expect
the
total
quantity
of
hazardous
waste
that
is
blended
to
change
substantially
due
to
the
HWC
MACT
replacement
standards.
As
a
result,
we
anticipate
that
job
dislocations
and
gains
in
the
fuel
blending
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E­
3
sector
will
roughly
offset
each
other
as
facilities
divert
wastes
to
other
combustion
facilities
and
to
other
waste
management
alternatives.

Another
simplification
in
the
analysis
involves
the
geographic
dimension
of
the
employment
impacts.
Because
we
estimate
national
values
for
employment
changes,
our
analysis
cannot
predict
the
geographic
distribution
of
employment
impacts.
It
is
probable,
however,
that
the
job
gains
will
not
occur
in
the
same
localities
as
do
the
job
dislocations.
The
HWC
MACT
replacement
standards
will
likely
affect
regions
of
the
country
in
different
ways
not
only
due
to
the
potentially
unequal
distribution
of
job
gains
and
dislocations
but
also
as
a
result
of
regional
secondary
impacts
as
displaced
workers
move
to
find
work
in
other
locations.
Additionally,
some
portion
of
jobs
created
from
the
increased
demand
for
pollution
control
equipment
may
occur
outside
of
the
United
States
entirely.

Finally,
the
analysis
does
not
attempt
to
include
a
precise
time
component
for
the
employment
estimates.
Employment
impacts
may
not
all
occur
immediately,
and
job
gains
and
dislocations
may
not
occur
concurrently.
For
example,
short­
term
employment
surges
may
occur
in
the
pollution
control
equipment
industry
as
combustion
facilities
make
their
initial
equipment
purchases.
In
addition,
job
dislocations
in
the
combustion
industry
may
initially
be
lower
than
we
estimate,
as
some
combustion
systems
will
continue
burning
until
they
need
to
reinvest
in
capital
equipment.
The
estimates
we
present
are
based
on
long­
term
averages
because
these
provide
an
upper­
bound
estimate
of
primary
employment
dislocations
and
gains
associated
with
the
rule.

ESTIMATING
JOB
DISLOCATIONS
Primary
employment
dislocations
in
the
combustion
industry
are
likely
to
occur
when
combustion
systems
consolidate
waste
burning
or
when
a
facility
exits
the
hazardous
waste
combustion
market
entirely.
The
methodology
we
used
to
estimate
employment
dislocations
within
the
combustion
industry
is
described
below.
Exhibit
E­
1
also
provides
an
illustration
of
the
approach.
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May
2005
1
Baseline
employment
estimates
are
assigned
to
individual
modeled
systems
and
were
provided
by
Bruce
Springsteen,
EERGC,
June
1998.

2
Facility
employment
requirements
are
assigned
to
each
combustion
system
based
on
type
and
other
systemspecific
parameters,
but
we
assume
that
these
employees
are
shared
across
multiple
systems
within
a
particular
facility.

E­
4
Exhibit
E­
1
Procedure
to
Estimate
Employment
Dislocations
System
stop
burning
hazardous
waste?
Assign
0
dislocations
to
system.
No
Yes
Is
this
the
only
system
at
the
facility?
Yes
Assign
system
and
100
percent
of
facility
employment
dislocations.

No
R
=
Ratio
of
system
capacity
to
facility
capacity.
Total
dislocations
=
system
dislocations
+
R(
possible
facility
dislocations)

Methodology
Employees
Involved
with
Hazardous
Waste
Burning
Operations
in
the
Baseline
The
first
step
in
estimating
employment
dislocations
is
to
assign
baseline
employment
estimates
to
each
system.
1
Employment
estimates
include
only
the
employees
involved
with
hazardous
waste
burning
operations;
we
exclude
employees
in
affiliated
activities
(
e.
g.,
cement
production
personnel
at
waste­
burning
cement
kilns).
Two
major
employment
groupings
are
associated
with
the
burning
of
hazardous
waste:
system
requirements
and
facility
requirements.
Employees
who
operate
the
equipment
at
individual
combustion
systems
are
classified
under
system
requirements,
while
employees
who
fulfill
facility­
wide
duties,
such
as
clerical
support
and
safety
coordination,
are
categorized
under
facility
requirements.
2
Average
system
and
facility
employment
requirements
are
shown
in
Exhibit
E­
2
by
sector.
It
is
important
to
note
that
these
estimates
assume
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2005
E­
5
full
capacity
utilization
(
e.
g,
three
eight­
hour
shifts
per
day)
and
will
therefore
steer
the
analysis
towards
more
conservative
or
upper­
bound
job
loss
estimates.

Calculating
the
Job
Dislocation
Estimates
Once
baseline
employment
estimates
are
assigned
to
each
combustion
system,
we
run
the
economic
impact
model
to
determine
which
systems
are
expected
to
stop
burning
waste
under
each
regulatory
option.
For
each
system
that
stops
burning
hazardous
waste,
we
assign
employment
dislocations
corresponding
with
its
system
requirements.
We
also
estimate
the
expected
reduction
in
facility
requirements
associated
with
the
closure
of
a
combustion
system.
When
a
combustion
system
closes,
we
assume
that
facility
employment
requirements
fall
in
proportion
with
the
resulting
decline
in
facility
capacity.
For
example,
if
the
closure
of
a
combustion
system
reduces
the
facility's
hazardous
waste
treatment
capacity
by
20
percent,
facility
employment
requirements
also
fall
by
20
percent.

Exhibit
E­
2
AVERAGE
ESTIMATES
OF
EMPLOYEES
ASSOCIATED
WITH
HAZARDOUS
WASTE
COMBUSTION
OPERATIONS
(
System
and
Facility
Employment
Requirements)
a
Combustion
Sector
System
Requirements
(
Average
#
of
Employees)
b
Facility
Requirements
(
Average
#
of
Employees)
c
Commercial
Incinerators
22.5
5.8
On­
Site
Incinerators
6.6
1.4
Cement
Kilns
7.2
2.7
LWAKs,
Boilers,
and
Industrial
Furnaces
3.3
2.4
Notes:
a
Employment
requirement
estimates
assume
full
capacity
utilization
(
three
eight­
hour
shifts
per
day).
b
Employment
requirements
are
assigned
based
on
system­
specific
parameters
(
e.
g.,
sector
type,
size).
c
Employees
who
operate
individual
combustion
systems
are
classified
under
system
requirements,
while
employees
who
fulfill
facility­
wide
duties
(
e.
g.,
clerical
support,
safety
coordination)
are
categorized
under
facility
requirements.
We
assume
facility
employees
to
be
shared
across
multiple
systems
within
a
particular
facility.
Source:
Estimates
prepared
by
Bruce
Springsteen,
EERGC
Corporation,
June
1998.
We
assume
that
employment
requirements
for
boilers
and
industrial
furnaces
are
the
same
as
those
for
LWAKs.
Boiler
and
industrial
furnace
estimates
were
not
provided
by
EERGC.
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May
2005
3
Small
incremental
gains
associated
with
transporting
wastes
from
on­
site
incinerators
to
commercial
facilities
are
also
possible;
we
do
not
evaluate
these
gains
in
this
analysis.

E­
6
Caveats
and
Limitations
As
discussed
earlier
in
the
general
methodology
framework
section,
the
employment
dislocation
impacts
analysis
is
subject
to
several
key
caveats
and
limitations:

°
First,
as
previously
mentioned,
the
approach
does
not
address
potential
secondary
employment
effects,
either
within
the
local
economies
of
communities
with
closing
combustion
facilities
(
as
earnings
decline)
or
within
the
generators'
operations
(
as
combustion
prices
increase).

°
Second,
employment
dislocation
estimates
are
sensitive
to
waste
quantity
data
assumptions.
Substantial
changes
in
waste
quantities
would
alter
employment
dislocation
estimates
because
market
exit
patterns
would
change.

°
Third,
as
facilities
exit
the
waste
burning
market,
wastes
are
likely
to
be
diverted
to
other
combustion
systems.
Depending
on
the
utilization
of
labor
at
these
systems,
additional
staff
could
be
required
to
handle
these
incremental
quantities.
However,
as
mentioned
earlier,
we
do
not
anticipate
significant
offsets
to
job
dislocations
from
this
waste
diversion
given
the
economies
of
scale
in
the
hazardous
waste
combustion
market,
the
existence
of
slack
capacity
across
all
combustion
sectors,
and
the
relatively
small
quantities
of
waste
expected
to
be
diverted.

°
Finally,
many
combustion
facilities
(
excluding
commercial
incinerators
that
will
shut
down
if
they
stop
burning
wastes)
may
be
able
to
transfer
waste
handling
employees
to
other
areas
of
the
business.
While
this
scenario
could
prevent
specific
individuals
from
being
displaced,
it
would
not
change
hazardous
waste
treatment
employment
losses
attributable
to
the
HWC
MACT
replacement
standards.

ESTIMATING
EMPLOYMENT
GAINS
In
addition
to
employment
dislocations,
the
HWC
MACT
replacement
standards
will
also
lead
to
job
gains
as
firms
invest
to
comply
with
the
various
requirements
of
the
standards.
Employment
increases
are
expected
in
the
following
areas:
3
°
Pollution
control
equipment
industry
­­
purchase
and
installation
of
new
IEc
DRAFT:
May
2005
4
This
number
of
hours
per
year
assumes
52
weeks
per
year,
five
days
per
week,
and
eight
hour
days.
We
do
not
subtract
any
vacation
time
nor
do
we
add
any
additional
hours
to
account
for
overtime.

5
Total
annual
costs
account
for
system
closure
and
intra­
facility
consolidation.

E­
7
NewEmployees

cost
of
the
requirement
(
annualized)

%
of
costs
spent
on
labor
average
hourly
wage
rate

hours
worked
per
year
pollution
control
devices.

°
Labor
within
the
combustion
facility:

­­
Operation
and
maintenance
of
the
new
pollution
control
equipment.

­­
Permitting
requirements.

Described
below
is
the
methodology
we
used
to
estimate
these
types
of
employment
gains.
Exhibit
E­
3
also
illustrates
the
approach.

Methodology
Employment
gains
are
determined
by
estimating
the
labor
requirement
for
each
of
the
categories
described
above.
The
labor
requirement
is
calculated
as
follows:

To
perform
the
calculation
shown
above,
we
need
the
following
data
associated
with
each
compliance
requirement:

°
Percentage
of
total
compliance
costs
expected
to
be
spent
on
labor
°
Average
wage
rate
associated
with
performing
the
given
compliance
task
or
producing
the
piece
of
equipment
The
assumptions
we
use
for
these
data
inputs
are
shown
in
Exhibit
E­
4.
We
assume,
for
instance,
that
a
full­
time
employee
works
2,080
hours
per
year.
4
For
each
combustion
sector,
we
calculate
employment
gains
associated
with
each
of
the
three
types
of
compliance
requirements
­­
pollution
control
equipment,
operation
and
maintenance,
and
incremental
permitting
costs.
We
do
not
need
to
calculate
employment
gains
associated
with
the
compliance
requirements
for
each
combustion
system
that
continues
burning.
Rather,
we
use
total
annualized
costs
of
the
requirement
because
a
significant
portion
of
the
employment
gain
estimates
are
provided
for
the
pollution
control
equipment
industry
and
need
not
be
associated
with
specific
combustion
systems.
5
For
example,
to
calculate
total
employment
gains
associated
with
the
purchase
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DRAFT:
May
2005
E­
8
of
the
pollution
control
equipment
for
the
cement
kiln
sector,
we
first
determine
total
annualized
compliance
costs.
We
then
multiply
this
figure
by
the
percentage
of
compliance
costs
expected
to
be
spent
on
labor
(
50
percent).
Next,
we
divide
by
the
average
hourly
wage
rate
($
23.69/
hour)
and
the
total
hours
a
worker
in
the
pollution
control
industry
is
expected
to
work
in
a
typical
year
(
2,080
hours/
year).
From
these
calculations,
we
estimate
the
number
of
full­
time
employees
that
will
be
hired
in
the
pollution
control
equipment
industry
to
accommodate
the
additional
purchases
by
cement
kilns
continuing
to
burn
hazardous
waste.
Employment
gain
estimates
are
similarly
calculated
for
the
other
compliance
requirements
and
combustion
sectors.

Exhibit
E­
3
PROCEDURE
USED
TO
ESTIMATE
EMPLOYMENT
GAINS
Pollution
Control
Equipment
Costs
Operating
and
Maintenance
Costs
Reporting
and
Record­
Keeping
Costs
Multiply
each
cost
category
by
the
percentage
of
costs
the
industry
spends
on
labor
Divide
by
average
hourly
wage
in
that
industry
Divide
by
average
total
hours
a
full­
time
employee
in
the
pollution
control
industry
is
expected
to
work
each
year
Annual
employment
gains
estimate
by
category
IEc
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May
2005
6
ICF
Resources,
Incorporated,
1992.

E­
9
Caveats
and
Limitations
°
We
assume
that
pollution
control
equipment
is
purchased
only
from
domestic
producers.
This
assumption
provides
a
fair
estimation
of
employment
impacts.
While
many
foreign
firms
produce
pollution
control
equipment,
the
bulk
of
their
production
capacity
is
in
the
United
States,
using
domestic
labor.
6
°
As
with
job
dislocations,
job
gains
are
driven
by
the
number
of
systems
that
remain
in
the
combustion
market.
As
a
result,
substantial
shifts
in
waste
quantities
would
alter
market
exit
patterns
and
therefore,
primary
job
gains.

°
Estimates
of
employment
gains
do
not
include
secondary
employment
effects.

Exhibit
E­
4
ASSUMPTIONS
USED
TO
ESTIMATE
EMPLOYMENT
GAINS
Category
of
Employment
Gains
Average
Wage
Rate­
includes
benefits
(
2002$)
a
Percent
of
Compliance
Costs
Spent
on
Laborb
Pollution
Control
Equipment
(
purchase
and
installation)
$
23.69
per
hour
*
50%

Operating
and
Maintenancec
$
25.05
per
hour
*
42%

Permitting
Requirementsd
$
42.37
per
hour

90%

Notes:
a
Wage
rates
determined
as
follows:
b
The
percentage
of
pollution
control
equipment
expenditures
spent
on
labor
is
based
on
analysis
in
Business
Opportunities
of
the
New
Clean
Air
Act:
The
Impact
of
the
CAAA
of
1990
on
the
Air
Pollution
Control
Industry,
prepared
by
ICF
Resources
Incorporated
and
Smith
Barney,
Harris
Upham
and
Company
Incorporated,
for
the
Office
of
Air
and
Radiation,
U.
S.
Environmental
Protection
Agency,
August
1992.
Includes
labor
associated
with
both
the
equipment
manufacture
and
other
work
that
typically
falls
under
subcontracts,
e.
g.,
work
on
foundations,
electrical,
fabrication
and
installation,
piping
and
fitting.
c
We
anticipate
that
the
labor
content
of
operation
and
maintenance
will
be
higher
than
that
assumed
for
manufacture
of
pollution
control
equipment.
Lacking
specific
data
on
this
subject,
EPA
invited
industry
to
provide
comments
on
this
assumption
in
1999
but
did
not
receive
any.
d
The
ICR
for
the
hazardous
waste
combustion
rulemaking
assumes
that
100
percent
of
the
permitting
expenditures
are
spent
on
labor.
Since
materials
(
postage
and
paper)
and
equipment
(
phones
and
computers)
are
also
necessary
to
perform
the
requirements,
we
decreased
this
figure
to
90
percent.

*
Total
employer
costs
for
employee
compensation,
specific
to
the
manufacturing
sector.
Costs
are
fully
burdened
and
include
employee
benefits
and
other
legally
required
costs.
Source:
U.
S.
Bureau
of
Labor
Statistics,
"
Table
10.
Private
Industry
by
Occupational
and
Industrial
Categories:
March
1997."
(
http://
stats.
bls/
gov/
news.
release/
ecec.
t10.
htm
­
May
1,
1998.)
*
Wage
rate
of
$
18
per
hour
burdened
at
23
percent
rate
to
account
for
taxes,
insurance,
benefits,
etc.
results
in
an
average
wage
rate
of
$
22.14.
Estimate
from
Gardner,
Pearson,
and
Moyeda,
Development
of
Baseline
Costs
for
Hazardous
Waste
Incineration,
prepared
by
Energy
and
Environmental
Research
Corporation,
April
18,
1995.
(
We
then
converted
wage
rate
to
1996
dollars.)


Estimate
calculated
from
results
in
ICF
Kaiser,
Supporting
Statement
for
EPA
Information
Collection
Request
#
XXXX
[
sic]
"
Reporting
and
Recordkeeping
Requirements
for
National
Emissions
Standards
for
Hazardous
Air
Pollutants
from
Hazardous
Waste
Combustors,"
October
4,
1995.
In
the
ICF
report,
average
hourly
labor
rates
for
respondents
are
$
91.23
for
legal
staff,
$
69.47
for
managerial
staff,
$
45.47
for
technical
staff,
and
$
23.78
for
clerical
staff.
The
figure
shown
in
the
table
is
a
weighted
average
of
these
wage
rates,
calculated
by
dividing
the
total
annual
cost
of
permitting
requirements
by
the
total
hours
per
year
spent
complying
with
these
requirements.
IEc
DRAFT:
May
2005
E­
10
IEc
DRAFT:
May
2005
E­
11
REFERENCES
Employment
Dislocation
Analysis
Energy
and
Environmental
Research
Corporation.
1998.
Revised
Estimation
of
Baseline
Costs
for
Hazardous
Waste
Combustors
for
Final
MACT
Rule.
Prepared
for
Industrial
Economics,
Incorporated
and
the
U.
S.
Environmental
Protection
Agency.

Employment
Gains
Analysis
Gardner,
M.,
et
al.,
Energy
and
Environmental
Research
Corporation.
1995.
Development
of
Baseline
Costs
for
Hazardous
Waste
Incineration.
Prepared
for
Industrial
Economics,
Incorporated.

ICF
Kaiser.
1995.
Supporting
Statement
for
EPA
Information
Collection
Request
#
XXXX[
sic]:
Reporting
and
Recordkeeping
Requirements
for
National
Emissions
Standards
for
Hazardous
Air
Pollutants
from
Hazardous
Waste
Combustors.
Prepared
for
the
U.
S.
Environmental
Protection
Agency.

ICF
Resources,
Incorporated
and
Smith
Barney,
Harris
Upham
and
Company,
Incorporated.
1992.
Business
Opportunities
of
the
New
Clean
Air
Act:
The
Impact
of
the
CAAA
of
1990
on
the
Air
Pollution
Control
Industry.
Prepared
for
the
Office
of
Air
and
Radiation,
U.
S.
Environmental
Protection
Agency.

U.
S.
Bureau
of
Labor
Statistics.
"
Table
10.
Private
Industry
by
Occupational
and
Industrial
Categories:
March
1997."
Internet
Address:
http://
stats.
bls/
gov/
news.
release/
ecec.
t10.
htm.
