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A Debate Arises on Job Creation and Environment
By MOTOKO RICH and JOHN BRODER
Do environmental regulations kill jobs?
Republicans and business groups say yes, arguing that environmental protection is simply too expensive for a battered economy. They were quick to claim victory Friday after the Obama administration abandoned stricter ozone pollution standards.
Many economists agree that regulation comes with undeniable costs that can affect workers. Factories may close because of the high cost of cleanup, or owners may relocate to countries with weaker regulations.
But many experts say that the effects should be assessed through a nuanced tally of costs and benefits that takes into account both economic and societal factors. Some argue that the costs can be offset as companies develop cheaper ways to clean up pollutants, and others say that regulation is often blamed for job losses that occur for different reasons, like a stagnant economy. As companies develop new technologies to cope with regulatory requirements, some new jobs are created.
What’s more, some economists say, previous regulations, like the various amendments to the Clean Air Act, have resulted in far lower costs and job losses than industrial executives initially feared.
For example, when the Environmental Protection Agency first proposed amendments to the Clean Air Act aimed at reducing acid rain caused by power plant emissions, the electric utility industry warned that they would cost $7.5 billion and tens of thousands of jobs. But the cost of the program has been closer to $1 billion, said Dallas Burtraw, an economist at Resources for the Future, a nonprofit research group on the environment. And the E.P.A., in a paper published this year, cited studies showing that the law had been a modest net creator of jobs through industry spending on technology to comply with it.
The question of just how much environmental regulation hurts jobs is a particularly delicate one as leaders in Washington debate the best ways to address the nation’s stubbornly high unemployment rate. As President Obama prepares for an important speech on Thursday focusing on job creation, Republicans are pushing for a rollback in environmental regulations that they say saddle companies with onerous costs that curtail jobs without leading to significant improvement in environmental or public health.
Part of the problem in evaluating the costs of regulation is that there have been few systematic studies of such costs after regulations are imposed.
“Regulations are put on the books and largely stay there unexamined,” said Michael Greenstone, an economist at the Massachusetts Institute of Technology. “This is part of the reason that these debates about regulations have a Groundhog’s Day quality to them.”
Mr. Greenstone has conducted one of the few studies that actually measure job losses related to environmental rules. In researching the amendments to the Clean Air Act that affected polluting plants from 1972 and 1987, he found that those companies lost almost 600,000 jobs compared with what would have happened without the regulations.
But Mr. Greenstone has also conducted research showing that clean air regulations have reduced infant mortality and increased housing prices, and indeed many economists argue that job losses should not be considered in isolation. They say the costs of regulations are dwarfed by the gains in lengthened lives, reduced hospitalizations and other health benefits, and by economic gains like the improvement to the real estate market.
Business groups also tend to cite regulation even if other factors are involved, critics say. The cement industry is currently warning that as many as 18 of the 100 cement plants currently operating in the United States could close down because of proposed stricter standards for sulfur dioxide and nitrogen oxide emissions, resulting in the direct loss of 13,000 jobs.
An E.P.A. analysis of the proposed rules projects a much smaller effect, ranging from as few as 600 jobs lost to 1,300 jobs actually added in companies that make cleaner equipment.
Some cement plants could be at risk simply because of the economy. With the housing market on its knees, demand for cement is down by about 40 percent from its prerecession peak. According to Andy O’Hare, vice president for regulatory affairs at the Portland Cement Association, a trade group, about a third of the cement plants in the country are being shut off every other month.
That’s precisely why imposing new regulations right now could be tricky. “Even if these rules have benefits that justify the costs, there is still a separate question on when is the right time to impose these regulations,” said John Graham, dean of the Indiana University School of Public and Environmental Affairs and the head of the White House Office of Information and Regulatory Affairs under President George W. Bush. “These benefits, which are often quite substantial, tend to be long term before they are incurred. They don’t necessarily help in this short-term precarious situation that we’re in.”
As much as timing, many companies are seeking clarity, saying they are more concerned about knowing what the rules are — and when and how much they will change — than eliminating the rules altogether.
“The environmental regulations are a moving target,” said Spencer Weitman, president of the National Cement Company of Alabama, a cement maker in Ragland, Ala. The company has suspended a $350 million project to build a new kiln because, it says, it cannot figure out which of three proposed standards it must meet. The firm has been cited by House Republicans as a case study in how environmental rules kill jobs, as National Cement estimated that it would take about 1,500 construction workers to build the kiln and then 20 to operate it on a permanent basis.
Mr. Weitman said the company, which has been asking the E.P.A. for clarification, worried that it would not be able to afford the technology required to comply with new standards. But, he said, “we agree that we need to protect the environment and we need regulations in place to make sure that we all do it right. That’s not the argument that we’re coming up with. We do need regulations that are achievable and that make sense.”
For now, the Obama administration is moving ahead with plans for a number of other environmental rules, including regulations governing industrial emissions that cross state lines and toxic air pollution from power plants and factory boilers.
In issuing new regulations, the administration says it weighs job creation and economic growth as carefully as it does health, safety and environmental impacts, a commitment enshrined in an executive order signed by the president earlier this year.
House Republicans say the administration is engaged in a spasm of rule-making that is retarding the nation’s economy and exacerbating persistently high unemployment. They have announced plans to review and repeal a catalog of environmental, labor and health care rules beginning this week.
Finding a middle ground is difficult, especially in the midst of heated political wrangling over how to cope with the sputtering economy. Businesses are focusing almost entirely on the costs. Environmental groups, meanwhile, tally up the benefits without paying much heed to the costs.
“My view is that the Republican claim that ‘job-killing regulation’ is a redundancy is as ridiculous as the left-wing view that ‘job-killing regulation’ is an oxymoron,” said Cass Sunstein, head of the White House Office of Information and Regulatory Affairs. “Both are silly political claims that have no place in a serious discussion.”
