A company in 2009 with just 75 employees was projected to grow so large that the plant it wanted to open in Michigan would create 27,142 jobs by 2024, or roughly the size of the entire population of the city of Garden City.

Sound too good to be true?

Not if you buy into the math used by advocates of the renewable energy ballot proposal and some of the mainstream media.

That 2009 company is A123 Systems and the Michigan Economic Development Corp. (MEDC) projected the battery manufacturer would create 2,217 jobs by 2024, not 27,142.

The 27,142 jobs would actually be "job years," a term used in a study done under a contract between Michigan State University and the Michigan Environmental Council, that uses job years to describe the economic impact a renewable energy ballot proposal would have if it were passed in November.

The MSU study clearly states that job years are based on jobs calculated for the life of a plant that lasts 20 to 30 years. So one job would equal 20 to 30 job years.

However, proponents of the renewable energy ballot proposal and some others say job years and jobs are interchangeable. If passed, those groups are reporting the renewable energy ballot proposal would create about 74,000 jobs even though the MSU study clearly states it's 74,000 job years.

Douglas Jester, a principal of 5 Lakes Energy LLC, a consultant who supports the energy ballot proposal, said the job years designation is used in economic projections in part so that jobs that took three months to complete weren't described as a year-long job.

However, when an economic impact analysis projects job growth for up to 30 years like the MSU study did, the difference between job years and jobs can be extensive.

For example, in 2007, the MEDC used an economic model to project that Google would create 2,033 total jobs by opening an office in Ann Arbor. But if the MEDC had used job years, the number would have jumped to 4,471, according to the projections in the MEDC’s internal memos. And if you look at the full 20-year analysis, the Ann Arbor office would have been responsible for 2,245 jobs by 2026, which would translate to 37,057 job years over that 20-year period.

Obviously in an analysis that spans 20 years or more, jobs and job years are not interchangeable.

Yet, that is what MSU researcher Charles McKeown claims, according to a Detroit News reporter who said McKeown explained to her the two terms were interchangeable. An Aug. 10 article in The News said the energy ballot proposal would create 74,000 jobs.

Crain's Detroit Business also originally reported the number as being jobs, but the business publication has since corrected its story online to report the numbers as job years instead of jobs.

McKeown didn’t respond to an email seeking confirmation of what he told The Detroit News.

The email sent from The News reporter read:

According to Charles McKeown, one of the three Michigan State University researchers who completed this study, the terms "jobs" and "job years" are used interchangeably in terms of economic modeling.

As you mentioned, the researchers defined a job year as "full employment for one person for 2080 hours in a 12 month span."

"Jobs and job years are used interchangeably," McKeown reportedly told The News. "The rest is trying to make a controversy out of semantics."

However, as the A123 Systems jobs forecast shows, there is a difference between projecting 2,217 jobs and 27,142 job years.

James Hohman, the Mackinac Center for Public Policy fiscal analyst who first caught the error being made by proponents, said it was "misleading the public" to say jobs were the same as job years in a report that looked at 20 years of jobs impact.

Mackinac Center analysts have long been critical of the way consultants — and frequently their clients — misuse economic modeling software.

We were reminded why with the recent publication of two papers purporting to show large job creation, if only state voters would approve a renewable energy mandate on the statewide November ballot.

The initiative, commonly known as the Michigan Renewable Energy Amendment, would mandate that 25 percent of Michigan's energy usage be provided by renewable sources by the year 2025. There is at least one major problem with each study, however: costs.

The study authors' did not include the estimated costs of the mandate in their respective models. The utility industry has estimated that the mandate will cost some $12 billion. Until these costs or some other reasonable approximation thereof are included, neither report should be taken seriously.

The two studies were produced by Michigan State University for the Michigan Environmental Council and the consultancy Hill Group Management Consultants of Pennsylvania for the Energy Innovation Business Council, respectively. Each uses input-output models to measure the jobs impact of the mandate. Both use a model known as IMPLAN, and the former also used a model known as the Jobs and Economic Development Impact model.

The first study, “Projected Job and Investment Impacts of Policy Requiring 25 Percent Renewable Energy by 2025 in Michigan,” was produced by Michigan State University scholars, and was commissioned by the Michigan Environmental Council. It should be noted that the MEC, an environment-focused nonprofit, supports passage of the 25 by 2025 mandate. The MEC press release accompanying this study reported that passage of the mandate would create a minimum of 74,495 jobs.

First, and as Michigan Capitol Confidential has already noted, the press release misled readers because the report doesn’t actually say that. The report breaks down its job count to 74,495 job years. That is, a person newly hired by a wind company and who works 25 years would count as 25 job years, though it is still just one job.

Second, the report doesn't include costs associated with this mandate, only the benefits, so the model treated all new spending as manna from the heavens. Such an assumption does not comport with reality. As economist (and former Mackinac Center intern) Daniel J. Smith remarked, "The increasingly sophisticated Keynesian models … still fail to address the most basic question, 'Where is the money coming from?'"

Costs do occur and — if actually fed into the model — would show a different and perhaps negative jobs impact.

To the authors' credit, they responsibly spell out the fact that their modeling efforts "only reflect gross and not net impacts." Unfortunately, their disclaimer is on page 23 — the last page of the written text and far from the money quotes journalists typically seek upfront. This gross versus net fact was also left out of the MEC's mandate-aggrandizing press release.

The other study, "Economic Impact of New Energy Manufacturing in Michigan," similarly employed an input-output computer software model; the authors claim, however, that only "20,791 jobs would be supported" by the mandate. This study also ignores costs. Although the report isn't as explicit on this issue as the MSU paper, the authors confirmed by phone that their calculations involved a gross and not a net impact.

It must be underscored here that the two studies come to vastly different job creation conclusions. There are probably a number of good explanations for this, most notably that one counts job years while the other just counts jobs. Regardless of the reasons, these reports show how easy it is for consultants to obtain wildly different estimates of the same study subject (renewable mandate and jobs), over the same time period and using the same impact model (IMPLAN).

Economic models are not exempt from economic incentives, which may help temper the results produced in these particular models.

This author is far from the only individual to criticize the use of these models. In his 2006 paper, "Economic Impact Studies: Instruments for Political Shenanigans," author John Crompton argues that "most economic impact studies are commissioned to legitimize a political position, rather than to search for economic truth."

In his 1993 paper, "The Misuse of Regional Economic Models," Edwin Mills demonstrates how such impact models might be abused for political gain and offers some thoughts on how this occurs:

... [T]o justify increased spending, government officials must identify some publicly desired goal to be accomplished by government spending. Creation of new jobs is among the best such goals that can be found. ... [T]hey must make it plausible that government can accomplish the goal in a way that the private sector cannot. This is where REMI is so valuable. It is a complex computer model that lay people cannot understand or evaluate, and it has important scientific merits. Thus, the frequent government claims that the best scientific model available shows that x thousand jobs will be created by the project helps to carry the day.

Michigan economist and economic consultant Patrick Anderson made a similar argument in his 2005 book "Business Economics and Finance," writing, "Because the claimed economic impact of a proposed development can affect political support for a proposed project … an incentive often exists to exaggerate the benefits."

While economic impact software can be a useful tool for measuring economic phenomenon based on policy changes, they (and the output they produce) must be used responsibly.

Until the sponsors of the 25 by 2025 studies rework their estimates to include all the costs associated with this mandate, voters should not use these studies as an assessment of the proposed mandate's economic impact.