'Job Killing' Not Always a Black and White Matter

If political pundit’s slogans come in and out of fashion, clearly this season ‘Job Killing’ is the favorite.   The Job Killing label is the perfect accessory to every ensemble, particularly if the topic is business regulation.  And chief of the things being assigned that label are two new Clean Air Act rules expected this year from the EPA: the new Transport Rule governing Sulfur Dioxide and Nitrous Oxide and the Utility MACT rule covering utility emissions of mercury, lead, dioxin, arsenic, and others.

A counterpoint to the Job Killing label has arrived in a report from the environmentalist-investor coalition Ceres prepared by the Political Economy Research Institute of the University of Massachusetts, Amherst.  The report, titled New Jobs – Cleaner Air looked at the required upgrades, retirements, and new capacity construction in the eastern power gird.  It  concludes that 1,457,885 person-years worth of employment would be created between 2010 and 2015 or about 291,000 jobs per year.  Beyond the five-year construction employment there would also be a long tern net increase of 4254 jobs per year in operations and maintenance.  These numbers are actually likely to be low because they only included the eastern power grid and only counted direct jobs and indirect jobs in suppliers to the new construction, not induced jobs such as in retail.

Of course it is also possible to accuse the report creators of also being narrow in their view.  One and a half million jobs will not be paid using money that comes from nowhere.  Their wages will have to come either from what would otherwise be the utility companies’ net profits, or from increases in the cost of electricity.  And that will undoubtedly have downstream employment impacts.  What it really shows is that nothing is quite as black-and-white as lobbyists and pundits like to make it.  One person’s job-killer is another person’s…job!

No sensible person would suggest that regulations could be justified simply on the basis of make-work.  Presumably there should be some sort of general public benefit as well.  In that area, the track record of the EPA and the Clean Air Act is quite strong.  According to a 2003 report from the OMB in the decade between 1992 and 2002 the major regulations of the EPA had cost businesses between 23.3 and 26.6 billion dollars, but had national benefits (principally in reduced cases of bronchitis, asthma, COPD, etc) of between 120.7 and 193.1 billion dollars.  The EPA had (by a significant margin) the best cost/benefit ratio of any of the federal agencies included in the study.

The Ceres report prediction of jobs illustrates how fickle spin can be on a particular proposal, depending on who is in power at the moment.  The Transport Rules and MACR rule were originally part of George W Bush’s ‘Clear Skies Act’.  When Democrats blocked that proposal, President Bush directed the EPA to implement those rules through executive order.  The Bush Administration EPA’s baseline estimated the Clear Skies Act’s benefits were 41.5 billion dollars per year in 2010, increasing to 90.6 billion dollars per year in 2020.

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