Charging Ahead, Left Behind? Balancing Local Labor Market Trade-Offs of Recent U.S. Power Plant Retirements and Renewable Energy Expansion

Abstract

The Renewable Energy Transition has propelled two diverging trends in the United States energy industry: a major uptake in power generation from renewable sources and a series of closures of nonrenewable facilities. I study the counteracting labor market implications of both developments between 2019 and 2023, locating all operating utility-scale solar and wind generators and all 842 power plant and generator retirements. These retirements have been criticized by politicians and interest groups who believe that decarbonization policies are devastating fossil fuel dependent communities. I collect annual employment and earnings data for 3,000+ counties and 680+ commuting zones to evaluate the magnitudes of labor market reactions to plant retirements, measure the economic impacts of wind and solar, and identify disproportionate reactions to plant closures in regions without renewables. Distinct from prior literature, I concentrate on a more recent time period and extend existing methodologies to isolate adverse consequences based on a lack of renewable energy adoption. Using autoregressive two-way fixed effects modeling of same year and next year outcomes, I find that plant retirements had a nonsignificant negative impact on employment but were evidently damaging toward earnings, specifically personal income and total wages in commuting zones. I also identify significant positive economic impacts of solar capacity that do outweigh the average losses from retired plant capacity. However, I establish that regions with zero renewable capacity were more harshly affected by plant retirements, experiencing 3.5 to 4.6 times larger reductions in total wages. These findings highlight several economic benefits of renewable technologies but also recognize disparate trends in labor market quality after power plant closures in nonrenewable reliant economies.