As incoming President Donald Trump prepares to appoint an anti-regulatory U.S. Environmental Protection Agency (EPA) Administrator based on claims that environmental regulations "kill jobs," a new report that synthesizes decades of economics research documents that this claim is false.
The Environmental Integrity Project's report, Don't Believe the Job Killer Hype, examines data from the U.S. Bureau of Labor Statistics, as well as reports from the U.S. Office of Management and Budget and more than two dozen economists and researchers.
The federal government data show that only about two tenths of one percent of layoffs are caused by government regulations of any kind, including environmental regulations. Layoffs are caused far more often by corporate buyouts, technological advances and lower overseas labor costs.
"The evidence shows that there is simply no truth to the idea that regulations kill jobs or stifle growth," said Eric Schaeffer, executive director of the Environmental Integrity Project. "In fact, regulations provide huge economic benefits to our society, with minimal, though generally positive, effects on jobs and productivity. On the other hand, the absence of regulation can have severe economic consequences, with perhaps the most notable example being the 2008 financial collapse."
On Wednesday, the U.S. Senate held a confirmation hearing on Oklahoma Attorney General Scott Pruitt as Trump's pick to serve as the next EPA Administrator. Pruitt has made a career of repeatedly suing EPA for its "overreach" and has promised to make "regulatory rollback" a top goal.
President Elect Trump's website praises Pruitt for his opposition to what it calls "job killing" regulations. The Trump website features quotes praising Pruitt including this one from Texas Gov. Greg Abbott: "I look forward to working with Scott as he brings common-sense policies to a federal agency that has been one of the biggest job-killers in the Obama administration."
This term has been used repeatedly by Trump and Congressional Republicans, but an examination of economics data and literature reveals that the claim lacks a factual foundation and is just an empty rhetorical device that journalists should challenge and the public should reject.
Here are the facts, all of which are backed up by detailed citations listed in the report:
- According to information reported by employers to the U.S. Bureau of Labor Statistics, only two tenths of one percent of mass layoffs—defined as more than 50 people laid off for at least 30 days—are caused by government intervention or regulations (of any kind, not just environmental regulations).
- For every job lost due to regulations, 15 are lost due to corporate cost cutting and 30 are lost due to changes in the ownership of business or other organizational changes, according to the Bureau of Labor Statistics.
- A 2014 review paper from the London School of Economics concluded that the effect of environmental regulations on the competitiveness of businesses is "negligible compared to other factors such as market conditions and the quality of the local workforce."
- Over the last decade, the benefits of environmental regulations have exceeded the costs they impose by a ratio of more than ten to one, according to the U.S. Office of Management and Budget.
- All told, major regulations provide net economic benefits to the U.S. of more than $500 billion per year.
- A 2014 report by the Organization for Economic Cooperation and Development found that stronger environmental policies lead to short-term gains in productivity growth, resulting in permanently higher levels of productivity.
- Clean air and water regulations often require power companies and municipalities to hire construction workers and engineers to build filtration systems. A report prepared for the Utility Air Regulatory Group estimated that the installation of a sulfur dioxide scrubber on a 500-Megawatt coal plant, for example, creates more than 100 full-time jobs for three years.
- In 2009, Economists at the University of Massachusetts, Amherst found that per dollar of spending, solar and wind energy projects create twice as many jobs as coal or natural gas, including more jobs in manufacturing and construction and more "high-credentialed" jobs at an average hourly wage of $24.50.
Abel Russ, attorney for the Environmental Integrity Project and author of the report, noted that by selecting Scott Pruitt to run and possibly dismantle EPA, Trump appears to buy into the argument that it's better to delegate environmental regulations away from the federal government and towards the states.
"If this happens, we may also see a repeat of what some economists observed during President Reagan's efforts at deregulation in the 1980s," Russ said. "States with stronger environmental policies will outperform weak states and create more jobs, while states with weak environmental policies will suffer. Senators should keep this in mind when they vote on Pruitt's confirmation during the hearing this week."