# Iowa Economy

Biofuels industry inflates job creation numbers

I was for Ed Fallon in last year’s gubernatorial primary, and one big reason was Ed’s advocacy of an economic development strategy that did not rely on corporate welfare.

With that in mind, I was relieved that Chet Culver beat out Mike Blouin in the primary. Blouin in the governor’s mansion would have meant four more years of stressing the “Iowa Values Fund,” with exaggerated claims about the jobs created by the large corporations that got the money.

I was further reassured about Culver’s stance on economic development when he put Mike Tramontina in charge of the Iowa Department of Economic Development and called for a $1 million increase in funding for the the Main Street Iowa Program. The Main Street Program involves relatively small grants that help revitalize city and town centers.

The Iowa Senate reduced the budget increase for the Main Street Program to $500,000, and on the final day of the session the House Appropriations Committee further reduced that figure by another $100K. Still, we ended up with a $400,000 increase in funding for the Main Street Program, and I can’t imagine that would have happened under a Governor Blouin.

That said, Culver’s emphasis on the $100 million Power Fund to promote renewable energy did concern me. Not because I am against renewable energy, but because I feared that most of the money would go to subsidize ethanol and biodiesel at the expense of other technologies, such as wind, solar, and geothermal power. Culver has touted the economic benefits of the Power Fund mainly in connection with biofuels.

But this great letter to the editor published in the Des Moines Register’s Sunday edition indicates that the biofuels industry is not creating nearly as many jobs as we have been told.

The author of the letter is ISU economist David Swenson. He takes issue with the claims of the Renewable Fuels Association (RFA), a trade association promoting ethanol and biodiesel. Culver has claimed that the biofuels industry has created 53,000 jobs in Iowa, and it’s the RFA that has been pushing that number.

Swenson objects that this number is misleading because it includes 21,700 corn and soybean production jobs:

To claim that they were “created” is quite odd since they were already here. Biofuels does not “create” new farmers.

Also, that figure includes 22,300 temporary construction and related jobs (a very optimistic figure at best) and it treats those jobs as if they were part of the annual economy. They are temporary, and when this industry is fully deployed in its current corn-based manifestation, they will evaporate.

The true net gain in jobs to the state is likely somewhere less than 7,000 if we are simply auditing what is new to the Iowa economy during this decade and measuring those impacts with conventional economic impact procedures.

Investing in renewable technology makes sense for Iowa, but before we put all our eggs in the biofuels basket, we need a realistic idea about the economic benefits that industry brings to Iowa.

Thanks to Professor Swenson for reminding Register readers that we can’t take numbers produced by the RFA at face value.

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