Improving the Economies of Low-Income Communities
An energy technician in Wattsonville, California, tests a low-income home for air leaks using a blower door. Weatherization is responsible for creating some 8,000 such jobs in building energy science that provide weatherization and other energy services to homeowners.
Weatherization permanently reduces energy bills for low-income clients, thus increasing their spending power, improving the local housing stock, and providing jobs in the home improvement industry.
Increased Spending Power
Energy expenses comprise an economic drain on low-income communities. On average, energy bills account for about 16% of a low-income families gross income, and for many it may account for 20% or more. Economists estimate that more than 80% of energy expenses leave low-income communities, and thus do not circulate and generate additional economic activity inside those communities.
In contrast, weatherization reduces this drain and keeps investments circulating in local economies. For individual families the gain is immediate—average savings of 32% of their energy bills amounting to approximately about $350 per year depending on fuel prices. Although modest, these savings are significant for many low-income families and directly benefit the communities where they live.
Affordable Housing
Because weatherization upgrades the energy systems in homes and apartment buildings in low-income communities, it increases the value of its housing stock. By reducing long-term energy costs, weatherization also makes these housing units more affordable and more attractive in the market. In this way, weatherization helps address the nationwide shortage of affordable housing.
Jobs in Low-Income Communities
Finally, weatherization has a profound impact on low-income communities by stimulating the local home energy industry. This industry has matured along with the Weatherization Assistance Program and now it provides energy efficiency services to many homes in addition to those served by the program. Nationwide, weatherization supports 8,000 technical jobs in low-income communities, which will greatly expand as a result of the American Recovery and Reinvestment Act of 2009.
These jobs represent a significant source of economic development through what economists call the "multiplier effect." This effect describes the phenomenon whereby money circulates in local economies and is used to measure local economic development. An example best explains the concept: one person uses her paycheck to buy groceries in a local supermarket, which pays a cashier and truck driver, who, in turn, go to the local movie theater, etc. Without the original investment, there is no economic multiplier.
DOE estimates conservatively an economic multiplier of three from the investment in weatherization in local low-income communities. The net result is that the Weatherization Assistance Program is an effective economic development tool for low-income communities.