Environmental Regulations and Jobs

Imposing new regulations on an industry will generally cause some costs to be incurred by the affected organizations. These costs are usually labeled as job-killing, anticompetitive outrages against our free enterprise system. The government responds by pointing out that not all costs are being considered, and if they were, the net cost to the nation would demonstrate that the regulations are, on the whole, beneficial.

It is generally the Environmental Protection Agency (EPA) that is involved in regulatory disputes. Costing issues were discussed in Costing Environmental Regulation. Rules designed to provide better health outcomes have compelling advantages, but it is difficult to turn them into compelling cost savings mechanisms. A lost job in hand is much more easily visualized than the financial benefit to the nation from a person who one day might not get sick or die because of pollution.

An article in Businessweek by Elizabeth Dwoskin and Mark Drajem provides us with another way to view this conflict. They remind us that one organization’s cost is often another organization’s stimulus package.

"When the Obama Administration announced tough new pollution regulations for power plants last year, the industry loudly protested. The rules, which among other things will require coal-fired plants to make deep reductions in mercury and sulphur dioxide emissions by 2015, will cost utilities at least $12 billion, the Environmental Protection Agency estimates. Coal producers put the price tag at $21 billion. They say electricity prices will spike 12 percent, dozens of plants will close, and thousands of workers will lose their jobs."

That is the view we are fed by our mainstream news outlets. But this is what the makers of the equipment required to meet the environmental standards have to say.

"The Institute of Clean Air Companies, a trade association representing businesses that make products to reduce industrial emissions, forecasts the industry will add 300,000 jobs a year through 2017 as a result of the EPA rules."

This balancing of job losses and gains seems to be a persistent phenomenon.

"In 2002, Morgenstern and his colleagues published a landmark study detailing the effects of regulations on jobs in four polluting industries: paper, plastics, petroleum, and iron and steel....Between 1984 and 1994, a busy period for the EPA, the agency issued hundreds of clean air and water rules, which cost the four industries Morgenstern measured a total of $4.9 billion. In all, about 14,000 workers lost jobs. As the industries spent money to comply with the laws, they innovated. Steel companies hired workers to clean up and retrofit equipment. Plastics makers brought on engineers to develop safer products. Morgenstern estimates that in the end, the spending spurred by the government’s rules put 21,000 to 29,000 people to work. And that does not take into account other economic benefits that are overlooked in the political debate over jobs. Numerous studies across many years show that lower levels of pollutants in the air and water around power plants led to a decrease in illness, medical tests, missed days of work, and hospitalizations."

Anything that drives the development of new technologies will usually have spin-off developments that will be beneficial in other areas—and if large numbers of jobs are created—so much the better.

There are at least two sides to every argument, we must be careful to avoid listening to just one side.