New Study Reveals the Benefits of EPA Regulation for Labor
You can hear the echo chamber reverberate the talking points:
• The Independent Petroleum Association of America complains that drilling permits and pollution are curbing job growth.
• The head of the National Association of Manufacturers and the governor of Virginia write a joint article called “Proposed EPA rules could hurt job growth.”
• Presidential aspirant Newt Gingrich calls for the abolition of the Environment Protection Agency because of its “job-killing nature.”
• Sen. John Barrasso, introducing legislation to gut EPA authority, calls his bill the “Defending America’s Affordable Energy and Jobs Act.”
• Thirteen freshmen Senators begin their letter asking EPA to allow more pollution from industrial boilers by saying, “We are committed to protecting the jobs or hardworking Americans.”
• New House Majority Leader Rep. Eric Cantor in his first floor speech attack “job-killing government regulations.”
• Even some Democrats, such as Senator Jay Rockefeller, plan to introduce legislation to prevent the EPA from regulating greenhouse gasses, maintaining it is a threat to jobs.
Should workers and our organizations trust oil companies, corporate leaders, and their political spokespersons to be telling the truth about the impact of EPA regulation on jobs? Or should we first take a good, hard look for ourselves?
A study just released by Ceres and the Political Economy Research Institute of the University of Massachusetts examines the jobs effects of some of the new regulations -- ones that have been harshly attacked by EPA critics. This well-documented study finds that far from being “job killers,” the new regulations will create nearly 300,000 new jobs, especially skilled, high-pay jobs for engineers, project managers, electricians, boilermakers, pipefitters, millwrights, and iron workers.
Ceres (pronounced “series”) is a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges such as global climate change. The Poliical Economy Research Institute (PERI) is an independent unit of the University of Massachusetts, Amherst, with close ties to the Department of Economics.
The new study joins a large number of previous studies showing that EPA regulation, in addition to protecting the environment and the public’s health, also serves as a job-growing economic stimulus and development program for the American economy. These studies directly contradict the endlessly repeated mantra that environmental regulations are “job killers.”
The University of Massachusetts study is called Clean Air/New Jobs: Employment Effects of Planned Changes in the EPA’s Air Pollution Regulations. It focuses on the 36 states in the eastern half of the US that generate nearly three-quarters of the country’s electricity. It assesses the impact of two Clean Air Act regulations expected to be issued in 2011. One is the Clean Air Transport Rule (“Transport Rule”) regulating sulfur dioxide and nitrogen oxide emissions. The other is the National Emissions Standards for Hazardous Air Pollutants for Utility Boilers regulating mercury, lead, arsenic, and other pollutants (“Utility MACT”). These are among the new regulations that critics have charged would put “hundreds of thousands of jobs” at risk and “cost the United States 40,000 to 60,000 jobs a year.”
The study evaluated what will happen if the EPA issues stringent compliance requirements. It anticipates that these requirements will be met by putting pollution control equipment like scrubbers and particulate controls on all coal-fired power plants by 2015 and replacing some aging, less-efficient plants with new, less-polluting ones. The study includes both jobs in the plants affected and jobs affected in companies that provide goods and services to them.
The study finds that between 2010 and 2015, investment to meet the new regulations will produce 1.46 million job-years in the 36 states studied. That is the equivalent of 290,000 year-round jobs for the entire five-year period. Some of the jobs will be for making and installing the pollution control equipment and new power generation capacity by making and installing turbines, compressors, pipes, iron and steel products, environmental control machinery, and construction, creating jobs in construction, metal fabrication, and engineering. Others will be in the industries that supply products and services, including steel manufacturing, catalyst system manufacturing, control system manufacturing, and transportation services. They would involve such fields as engineering, coal, natural gas, metal fabrication, construction, and business services.
The new equipment will need permanent operations and maintenance workers to run it. At the same time, some jobs will be lost as older, less efficient power plants are phased out. The study finds that 22,000 new jobs will be created while 18,000 will be lost, for a net gain of 4,000 jobs. Many of the older plants will be phased out not because of environmental regulations, but because they have become unprofitable due to low natural gas prices, reduced demand, and high production costs due to inefficient technology.
The regulations will lead to net job increases of more than 120,000 job years in Illinois, 123,000 in Virginia, 113,000 in Tennessee, 76,000 in North Carolina, and 76,000 in Ohio. In every state in the region studied, the number of new jobs created is higher than the number lost.
The study points out that regulation will have many other benefits in addition to increased employment. It will ensure cleaner air, improve public health, promote more efficient, more competitive technologies, reduce greenhouse gasses, and increase state tax revenues. And it will stimulate “induced jobs” that result when workers have money in their pockets to buy things made or sold by other workers.
Scare talk that EPA regulation will “kill jobs” has a long history, going back to origins of Federal environmental protection. For example, the US Business Roundtable sponsored a study maintaining that as a result of the 1990 Clean Air Act amendments, “There is little doubt that a minimum of 200,000 (plus) jobs will be quickly lost, with plants closing in dozens of states. This number could easily exceed one million jobs — and even two million jobs — at the more extreme assumptions about residual risk.” In the eight years following the amendments, however, fewer than 7,000 jobs were lost in the entire country, and they were compensated many times over by new jobs in pollution control.
Many previous studies have documented the beneficial effects of EPA regulations. For example, an Office of Management and Budget study found that, in addition to cleaner air and better public health, EPA regulation under the Clean Air Act has provided four to eight dollars in benefits for every dollar spent on compliance. Another OMB study found that EPA air and water regulations from 1999 to 2009 cost $26-29 billion annually but produced benefits from $82-533 billion.
EPA regulation has led to the development of the rapidly growing environmental control industry. It has encouraged technical innovation, such as the development of catalytic converters, which has made the US one of the world’s leading exporters of environmental control technologies.
What about those who lose their jobs as a result of the closing of older, inefficient power plants? This is a question that organized labor should take head on. Just as the Federal government took responsibility for dealing with the effects of closing of military bases through the Base Realignment and Closure (BRAC) process, so the Obama administration should take responsibility for the workers and communities affected by power plant closures. A public policy strategy could draw on such existing programs as the Department of Labor’s Rapid Response Services and the National Emergency Grants of the DOL’s Employment and Training Administration, as well as funding for economic development and industrial efficiency and modernization from the Departments of Energy and Commerce.
The cost of compliance with EPA regulation is generally less than two percent of total business costs. The idea that companies will shut down or go abroad to avoid such costs is ludicrous. However, companies often try to blame shutdowns and runaways on environmental compliance costs as a way to displace responsibility from other causes, such as new technologies, increased productivity, fluctuating energy prices — and their own corporate strategic decisions.
It’s not hard to see why the companies being required to clean up what comes out of their smokestacks intend to fight it as a deduction from their bottom line. Nor is it hard to see why they would exploit America’s jobs crisis to bamboozle workers into letting them poison the atmosphere for free. But that doesn’t mean that it is in the interests of workers or of the American people to agree.
Before we accept their argument, we must ask: Is the attack on EPA regulation really an effort to protect America’s jobs? Or is it an effort to protect Corporate America’s bottom line?