Expanding on discussion started in Clean Air Act & the Anti-Regulation Movement Part 1 in which we compared past industry predictions of dire consequences of environmental regulation and the realities of their implementation. Industry consistently foresaw unsustainable cost increases and massive job losses resulting from the new regulations. So do environmental regulations really kill jobs?
The simple answer is…”No”
Environmental regulations have minimal, if any, impact on job loss or creation. However, there is evidence these regulations tend to foster, at least some, job creation.
In a far-reaching study by Richard Morgenstern and others (1999) entitled, Jobs versus the Environment: An Industry-level Perspective, researchers examined environmental impacts on industrial level jobs from 1979-1991. The study looked at traditional heavy polluting industries which included pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills. Findings showed increases in environmental compliance spending had no significant impact on employment. On average, the study found a net gain of 1.2 jobs for every $1 million spent on environmental compliance.
Another, more recent, review of environmental regulation impacts on the economy examined the effects of the 1997 air quality standards on metropolitan areas between 2004 and 2007. It is worth noting due to delays during the Bush administration and industry legal challenges, the 1997 rules did not go into effect until 2004. Despite predictions that the rules would be catastrophic for the economy, the analysis found real GDP in the effected metropolitan areas mirrored national trends indicating no significant impact, deleterious or otherwise.
Does industry send mixed-messages?
Despite evidence to the contrary and the wealth of real world observations which discredit past cataclysmic predictions, the same dire economic claims continue to gain credence in the public consciousness. What is the source of the contradictions?
The answer may well lie with industry. In a recent Associated Press article, Larry Margasak details out the conflicting messages industry leaders send to political leaders versus those they communicate to regulators and stakeholders. In congressional testimony the executive chairman of DTE Energy in Michigan stated, “…we face a potential regulatory train wreck [and] without the right policy, we could be headed for disaster.” However, in the company’s report to the Securities and Exchange Commission (SEC) it conceded they were, “reviewing potential impacts of the proposed and recently finalized rules, but [are] not able to quantify the financial impact … at this time.” , a statement illustrating a far less significant impact from the “disaster” the company predicted when speaking to House members.
In a separate instance, Jim Pearce of the chemical company FMC Crop, told a House committee that, “The current U.S. approach to regulating greenhouse gases … will lead U.S. natural soda ash producers to lose significant business to our offshore rivals….” . But 13 days later in the company reported to the SEC that it is, “premature to make any estimate of the costs of complying with un-enacted federal climate change legislation…”
In September, the CEO of Rock-Tenn Co testified in front of House membership that the EPA’s boiler emissions proposals would cost billions of dollars and up to 20,000 pulp and paper industry jobs. Yet, a month prior to his testimony the company indicated to the SEC that, “future compliance with these environmental laws and regulations will not have a material adverse effect on our results or operations, financial condition or cash flows.”
Despite these contradictions, polls of the independent and small business community illustrate a more cohesive perspective which trends towards consumer demand as the determining factor for job creation, not regulation. According to a National Federation of Independent Business survey only 20% of small businesses cited regulation as a significant problem.
In an open-ended Gallup poll taken between October 3-6 of this year 22% of small business owners indicated government regulation was the most important problem facing the country, an initial perception many adhere to. However, 15% cited consumer confidence (the overall degree of optimism consumers have about the economy) and 12% consumer demand as their primary issue. Given the interrelatedness of these two categories a valid argument for combining them into one issue can be made which would indicate consumers’ willingness to spend (27%) is more of a concern for small businesses. Further support for this is evident in the poll’s 3rd question in which “Growth and sales increases” ranked first as the primary requirement for business to thrive in 2012. In addition a second 2011 National Federation of Independent Business survey of small businesses found over half of small business owners saw weak sales as their primary concern.
Then, in what can be viewed as a capstone illustration of the disconnect between big industry & congressional Republicans and the independent business community’s comprehension of the need for environmental regulation, a group of 125,000 businesses wrote a letter to Senator Rand Paul objecting to his stance against cross-borders clean air standards. A portion of the letter reads as follows;
“We — leaders in the business community collectively representing over 125,000 businesses from across the country — are supportive of the Environmental Protection Agency’s (EPA) existing clean air rules, and stand united in opposition to legislative attempts to undermine the Clean Air Act. Currently, there are efforts in Congress to block the Cross State Air Pollution Rule (CSAPR) that requires power plants in 27 states to reduce emissions of smog- and soot-forming pollution that cross state lines and contribute to pollution in other states. Senator Rand Paul (R-KY) is promoting a shortsighted attempt to use the Congressional Review Act (CRA) to block the rule. Blocking clean air regulations, such as CSAPR, is not only an affront to public health, but also to the economy.”
More than just jobs
Regulations are not implemented as regulation for regulation sake. They are not created with the intent to hurt business or commerce and judging environmental regulations solely by their potential to affect job growth misses the point. There is a much broader issue which is often forgotten amidst the political bickering, the issue of the public’s health.
Prior to the Clean Air Act, air pollution in the US was responsible for millions of Americans suffering from heightened levels of respiratory illness, heart attacks, strokes, cancer, birth defects, mental retardation and death.
The debate over government regulation and the its limits will always be present in this country. The arguments against regulation reach their pinnacle with every financial downturn, accompanied by the all too familiar harrowing predictions and claims of economic calamity. Today’s current economic situation and resulting divisive political environment have spurred a multitude of regulation eliminating legislation, questionable assertions and a full range of effective, however inaccurate, talking points.
Given these conflicting messages and political adherence to anti-regulation policy and rhetoric, it is quite clear how public and business perceptions have become so convoluted. It is quite easy to discern how so many have accepted the belief regulations are the “job killers” Republicans contend. In a culture where quick fixes for economic problems are demanded environmental regulation, especially the Clean Air Act, are convenient scapegoats to insight public anger. But the facts are clear. These regulations have been in existence through numerous economic booms and busts and their impacts have been negligible. In reality, they have trended towards economic growth, not to mention their invaluable contributions to the overall health of the American people. Calls for their elimination are shortsighted and ignore the historical, malicious impacts pollution imposes on human health. Is it not time for the public to dismiss such ill-informed actions and remember where we were and how far we have come? Is it not time to recognize the realities and reject attempts to repeal the progress made over the previous 40 years? Is it not time to demand a focus on substantive solutions to the complex factors afflicting the country’s economy instead of fixating on the few, ill-conceived sacrificial lambs? Is there not but one answer to these questions?
Additional readings and information:
Clean Air Act Benefits Exceed Costs More Than 30-to-1
Cleaner Air Brings Drop in Death Rate
Children’s health and Republican efforts to lift restrictions on air pollutants
Dirty Air Costs California Economy $28 Billion Annually