The Contributions of Insulation to the U.S. Economy in 2016
Economics & Statistics Department American Chemistry Council February 2017
EXECUTIVE SUMMARY
- The use of insulation in U.S. homes in businesses saves energy, putting more money in the pockets of households and business owners. In addition, by consuming less energy, use of insulation directly reduces greenhouse gas emissions.
- Beyond the many benefits of the use of insulation, the manufacture, distribution, and installation of insulation generates nearly 400,000 jobs in the U.S. and more than $20 billion in payrolls that support families and local communities around the country.
- An $11.7 billion business in 2016, insulation manufacturing in the U.S. directly employs more than 33,000 people across 42 states.
- Indirectly, through its purchases of supplies, raw materials, equipment, and services, insulation manufacturing supports an additional 42,500 jobs in supply-chain industries. Through the household spending of the wages and salaries paid to workers in insulation manufacturing and their suppliers an additional 49,000 payroll-induced jobs are supported.
- Thus, the economic activity from U.S. insulation manufacturing supports nearly 125,000 jobs. These jobs generate payrolls of $7.5 billion.
- In addition, the combined economic activity supported by insulation manufacturing contributes $1.1 billion to state and local governments and $1.9 billion in federal tax revenues.
CONTENTS
EXECUTIVE SUMMARY
THE INSULATION INDUSTRY IN THE U.S.
Insulation Materials
ENVIRONMENTAL AND ECONOMIC BENEFITS OF INSULATION PRODUCTS
ECONOMIC SNAPSHOT OF THE INSULATION INDUSTRY
ECONOMIC CONTRIBUTIONS OF THE U.S. INSULATION INDUSTRY
Upstream Economic Impact
Downstream Economic Impact
CONCLUSION
APPENDIX – INSULATION JOBS IN THE STATES
NOTES ON METHODOLOGY AND SOURCES
DISCLAIMER
ECONOMICS AND STATISTICS DEPARTMENT
THE INSULATION INDUSTRY IN THE U.S.
Insulation is installed in homes and businesses around the country to keep hot things hot and cold things cold. Insulation comes in many forms and is made of several different materials, depending on what is being insulated, where it is located, and other factors.
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Residential insulation – attics, walls, floors and crawl spaces, roofs, doors and windows are insulated to reduce air leaks and increase energy efficiency.
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Nonresidential insulation – In commercial and industrial buildings, insulation of roofs and walls (building envelope) saves on heating and cooling costs.
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Appliances – refrigerators, freezers, ovens, dishwashers, hot water heaters are constructed with insulation to reduce thermal transfer.
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Equipment/Mechanical – insulating pipes, tanks, and other mechanical systems reduces energy consumption, and contributes to the competitiveness of U.S. industry by lowering production costs.
Insulation Materials
Insulation is made from a variety of materials, each with a unique set of properties (i.e., R value (1), ability to create complex shapes, and ease of installation). The most commonly used materials in insulation products are (in alphabetical order):
- Cellulose – plant fibers often made from recycled newspapers, paperboard, and paper. The cellulose source is shredded and mixed with other ingredients to enhance product use and performance. It is installed as loose fill or mixed with a water to be applied in a spray.
- Fiberglass – a fluffy wool-like material made from spun fibers of molten glass. The intertwined fibers of fiberglass insulation can be installed as loose fill or rolled into blankets or batts. It can also be formed into shapes.
- Mineral wool – a wool-like material made from spun fibers of molten minerals (including rock and blast furnace slag). It can be installed as loose fill, or pressed into blankets or batts, or formed into shapes.
- Polyisocyanurate foam (polyiso) – a plastic foam made from the combination of several chemicals reacted to generate a closed-cell, rigid foam. It is often manufactured in boards with a variety of facing materials or encapsulated in panels.
- Polystyrene foam – a plastic foam made from an expanded polymer of styrene. It is generally formed into blocks which are cut into panels.
- Polyurethane foam – a plastic foam that is generated by a chemical reaction among several chemicals. For insulation, the chemicals are sprayed on site where the foaming process fills cavities and gaps. The foam can also be molded into shapes or poured into cavities to insulate appliances and other equipment.
ENVIRONMENTAL AND ECONOMIC BENEFITS
OF INSULATION PRODUCTS
The insulation industry is essential to the quest for energy independence by reducing energy consumption and reducing energy-related greenhouse gas emissions. By lowering energy consumption, thus, energy bills, insulation helps make businesses more competitive and gives households more spending power. In addition, insulation reduces outside noise, reduces entryways for pollen and insects, allows for better humidity control, and lowers the chance for ice dams in snowy climates. While these benefits are enormous, they are difficult to quantify. The savings from insulation accrue to individual projects and businesses and depend on climate and the R value (or resistance to conductive heat flow) which makes it difficult to aggregate across the economy.
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In a 2009 analysis by McKinsey that examined multiple chemistry-enabled technologies to reduce emissions (3), the authors concluded “insulation alone accounted for 40% of the total identified CO2e savings.”
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According to the Business of Council for Sustainable Energy, U.S. energy productivity grew 16% between 2007 and 2016. (6) The use of insulation products across the economy is a key contribution to energy productivity growth.
In addition to creating economic and environmental benefits through its use, the manufacture, distribution, and installation of insulation also generates economic activity and supports jobs in the U.S.
ECONOMIC SNAPSHOT OF THE INSULATION INDUSTRY
Table 1 – Economic Snapshot of the Insulation Industry (2016)
Employment
Payroll ($ billion)
Insulation Manufacturing
33,400
$1.8
Distribution/Wholesale
32,500
$2.1
Installation
323,600
$16.3
Total
389,400
$20.2
ECONOMIC CONTRIBUTIONS OF THE
U.S. INSULATION INDUSTRY
The insulation manufacturing industry takes raw materials such as, glass, rock, slag, isocyanates, polyols, and recycled paper products and converts these materials into energy-saving insulation products. This analysis examines six basic types of insulation materials, including polystyrene, polyurethane, polyisocyanurate (polyiso), fiberglass, mineral wool and cellulose. In 42 states around the country, more than 33,000 workers are engaged in this essential economic activity. Table 2 presents the direct employment, payroll, and output associated with these main segments of insulation manufacturing.
Table 2 – Insulation Products Manufacturing (2016)
Employment
Payroll ($ billions)
Output ($ billions)
Polystyrene
4,084
$0.2
$1.6
Polyurethane/Polyiso
10,746
$0.5
$4.2
Fiberglass/Mineral wool
16,772
$1.0
$5.5
Cellulose
1,800
$0.1
$0.3
Total Manufacturing
33,402
$1.8
$11.7
The value and contributions of insulation manufacturing do not just accrue to the manufacturers. Economic activity is supported both upstream (through supply chain impacts) and downstream as manufactured insulation products move through distribution/wholesale channels to the contractors whose business includes installing insulation.
Upstream Economic Impact
The economic contributions of the insulation manufacturing were analyzed using an economic input- output model, IMPLAN. (7) This method estimates the total contributions of an industry to the economy at the state and national levels for a given year. The economic contributions analyzed in this report are employment, payroll and output in the U.S. for the year 2016.
The manufacture of insulation products directly generates $11.7 billion in industry shipments and directly employs 33,000 workers across 42 states. Insulation manufacturers purchase goods and services from their suppliers and their suppliers do the same. The economic impact generated by the insulation supply chain supports an additional 42,500 indirect jobs. Finally the wages paid by insulation manufacturers and their suppliers support nearly 49,000 payroll-induced jobs, jobs supported by the household spending of workers in the direct and indirect (supply-chain) segments. Thus, the economic activity from U.S. insulation manufacturing supports nearly 125,000 jobs. These jobs generate payrolls of $7.5 billion.
In addition, the combined economic activity supported by insulation manufacturing contributes $1.1 billion to state and local governments and $1.9 billion in federal tax revenues.
Table 3 – Upstream Economic Impact of Insulation Manufacturing (2016)
Employment
Payroll ($ billions)
Output ($ billions)
Direct Impact (Manufacturers)
33,402
$1.8
$11.7
Indirect Impact (Supply Chain)
42,512
$3.2
$13.9
Payroll-Induced Impact
48,971
$2.5
$8.1
Total Impact
124,886
$7.5
$33.7
Downstream Economic Impact
Looking downstream toward the distribution and installation of insulation products, additional employment is supported in those sectors. More than 32,000 wholesalers distribute insulation products to contractors and retailers around the country. And more than 300,000 workers are engaged in the drywall and insulation installation and nonresidential roofing. Payrolls in those sectors amount to $2.1 billion and $16.3 billion, respectively. The paychecks from these workers help support families and local economies throughout the U.S.
Table 4 – Downstream Employment and Payrolls (2016)
Employment
Payroll ($ billions)
Distribution/Wholesale
Roofing, Siding, and Insulation Wholesalers
32,503
$2.1
Installation/Contractors
Drywall & Insulation – Residential
98,964
$5.5
Drywall & Insulation – Nonresidential
128,207
$6.9
Roofing – Nonresidential
96,375
$3.9
Total Installation/Contractors
323,546
$16.3
CONCLUSION
The insulation industry including manufacturers, distributors, and installers make vital contributions to the U.S. economy. The products that they make, distribute, and install conserve precious energy resources, saving money for households and businesses. The use of insulation also has large environmental benefits as reduced energy consumption translates directly into lower emissions of greenhouse gases. In addition, through supply chain and payroll-induced impacts, the economic activity generated by American insulation manufacturing is broad and helps support local economies across the U.S. Moving through the economy, there are huge contributions in terms of jobs and payrolls generated by those businesses that distribute insulation products from manufacturers to where they will be installed. Finally, hundreds of thousands of workers make a living installing insulation in homes and businesses around the U.S.
(1) An insulating material’s resistance to conductive heat flow is measured or rated in terms of its thermal resistance or R-value — the higher the R-value, the greater the insulating effectiveness. The R-value depends on the type of insulation, its thickness, and its density. When calculating the R-value of a multilayered installation, add the R-values of the individual layers. Installing more insulation in your home increases the R-value and the resistance to heat flow. (U.S. Department of Energy)
(2) https://www.energystar.gov/index.cfm?c=home_sealing.hm_improvement_methodology
(3) McKinsey, “Innovations for Greenhouse Gas Reductions: A life cycle quantification of carbon abatement solutions enabled by the chemical industry.” July 2009.
(4) https://energy.gov/energysaver/heat-and-cool
(5) http://aceee.org/sector/commercial
(6) http://www.bcse.org/wp-content/uploads/BCSE-2017-Sustainable-Energy-in-America-Factbook-Brochure.pdf
(7) IMPLAN (IMpact analysis for PLANning) is a complete economic assessment package providing economic resolution from the National level down to the zip code level; MIG Inc. is the sole licensor of IMPLAN.
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APPENDIX – INSULATION JOBS IN THE STATES
Insulation manufacturing occurs in 42 states while distribution/wholesale and installation activities occur across all 50 states. Appendix Table 1 presents the top 10 states in each of the three main segments. Appendix Table 2 presents employment by segment for all states.
Appendix Table 1 – Top 10 States for Insulation Employment by Industry Segment
Manufacturing
Distribution/Wholesale
Installation/Contractors
Ohio
4,173
Texas
2,870
California
49,959
Texas
3,073
Florida
2,205
Texas
30,031
Georgia
2,714
California
2,113
Florida
20,286
California
2,150
Pennsylvania
1,802
New York
16,241
Indiana
2,014
New York
1,759
Washington
10,974
Illinois
1,849
Illinois
1,487
Ohio
10,733
Pennsylvania
1,668
Virginia
1,371
Pennsylvania
10,565
Florida
1,242
North Carolina
1,289
Illinois
10,167
North Carolina
895
Wisconsin
1,289
Arizona
9,002
Kentucky
868
New Jersey
1,188
North Carolina
8,704
Other States
12,757
Other States
15,130
Other States
146,884
Total
33,402
Total
32,503
Total
323,546
Top 10 as % of Total
62%
Top 10 as % of Total
53%
Top 10 as % of Total
55%
Appendix Table 2 – Insulation Employment by Industry Segment
Manufacturing
Distribution/ Wholesaler
Installation/ Contractors
Alabama
509
433
3,510
Alaska
33
27
390
Arizona
652
326
9,002
Arkansas
80
226
2,241
California
2,150
2,113
49,959
Colorado
367
1,012
8,358
Connecticut
297
467
3,592
Delaware
–
133
1,105
Dis. of Columbia
–
–
462
Florida
1,242
2,205
20,286
Georgia
2,714
1,151
7,411
Hawaii
–
50
1,708
Idaho
154
118
1,832
Illinois
1,849
1,487
10,167
Indiana
2,014
727
6,198
Iowa
417
593
3,884
Kansas
733
349
3,493
Kentucky
868
543
3,667
Louisiana
434
343
3,375
Maine
30
69
1,393
Maryland
38
387
8,068
Massachusetts
113
794
8,349
Michigan
863
504
5,776
Minnesota
200
786
6,250
Mississippi
529
232
1,848
Missouri
637
941
5,914
Montana
–
202
1,010
Nebraska
58
271
2,491
Nevada
445
110
5,050
New Hampshire
–
133
1,509
New Jersey
237
1,188
5,388
New Mexico
75
48
2,215
New York
659
1,759
16,241
North Carolina
895
1,289
8,704
North Dakota
25
85
939
Ohio
4,173
1,175
10,733
Oklahoma
476
293
4,009
Oregon
349
247
4,193
Pennsylvania
1,668
1,802
10,565
Rhode Island
–
77
1,094
South Carolina
782
491
3,462
South Dakota
–
106
999
Tennessee
314
632
5,240
Texas
3,073
2,870
30,031
Utah
836
333
4,732
Vermont
–
62
750
Virginia
759
1,371
7,778
Washington
356
533
10,974
West Virginia
588
77
1,069
Wisconsin
711
1,289
5,204
Wyoming
–
45
497
US
33,402
32,503
323,546
NOTES ON METHODOLOGY AND SOURCES
Data on direct employment and payrolls are based on data from the Bureau of Labor Statistics (Covered Employment and Wages program). In addition, for insulation manufacturing, employment estimates were also based on results from a January 2017 survey of insulation manufacturers. Payrolls were estimated using average annual pay for industries and states multiplied by the employment estimates.
For insulation manufacturing, where data on shipments was estimated as a portion of a larger NAICS code, employment was estimated using output-to-employment ratios for that particular NAICS code supplemented with data from the survey of insulation manufactures. Payrolls for each segment were estimated by multiplying employment by the average annual wage for that industry.
With the exception of fiberglass/mineral wool insulation manufacturing, insulation made from other materials falls within broader NAICS codes and is not easily pulled out of existing government data. As a result, data on shipments of manufactured insulation products was derived from multiple sources, including the Census Bureau, IHS Chemical, the Center for the Polyurethanes Industry, and trade associations.
Data on employment and payroll for distributors/wholesalers is based on NAICS 42333 (Roofing, Siding, and Insulation Wholesalers).
Data on employment and payroll for installers and contractors is based on the following NAICS codes: NAICS 238311 – Residential drywall & insulation contractors
NAICS 238312 – Nonresidential drywall & insulation contractors NAICS 238162 – Nonresidential roofing contractors
It was determined that these NAICS classifications represent a large share of the insulation installation segment. Drywall installation is included in NAICS 238311 and 238312. While no data exists to separate insulation contractors from drywall contractors, it is likely that a majority of these contractors are engaged in both lines of business. In addition, it should be noted that insulation is also installed by self-employed handymen and homeowners that are not included in industry employment data. Because roofs are a significant source of energy losses in commercial buildings, most roofing contractors are also engaged in insulation installment as part of a commercial roofing project. Though likely significant, installers of insulation in appliances, industrial equipment, mechanical systems, transportation equipment, etc. are not included due to a lack of data.
DISCLAIMER
Significant effort has been made in the preparation of this publication to provide the best available information. However, neither ACC, nor any of its employees, agents or other assigns, makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.
©2017 American Chemistry Council, Inc.
ECONOMICS AND STATISTICS DEPARTMENT
The Economics & Statistics Department provides a full range of statistical and economic advice and services for ACC and its members and other partners. The group works to improve overall ACC advocacy impact by providing statistics on American Chemistry as well as preparing information about the economic value and contributions of American Chemistry to our economy and society. They function as an in-house consultant, providing survey, economic analysis and other statistical expertise, as well as monitoring business conditions and changing industry dynamics. The group also offers extensive industry knowledge, a network of leading academic organizations and think tanks, and a dedication to making analysis relevant and comprehensible to a wide audience. The primary author of this report is Martha Gilchrist Moore.
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