Another big lie: Environmental regulations destroy jobs

Environmental regulations do affect jobs. But contrary to claims by polluting industries and their bought and sold congressional Republican politicians, efforts to protect our environment will actually create jobs

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By Rocky Boschert
Financial Editor

America’s worse polluting industries, along with the Republican legislators (and some Democrats) that are in their pockets, consistently claim that environmental regulations will be a “job killer.” They deviously counter efforts to control harmful pollution and to protect a growingly fragile environment by claiming that any such measures would increase costs and destroy jobs. But as educated citizens understand, these are empty threats. In fact, the bulk of the evidence shows that environmental regulations do not hinder employment or economic growth - and may actually stimulate both.

The allegation that environmental regulation is a job-killer is based on a mischaracterization of costs, both by firms and by right wing economists. Firms often frame spending on environmental controls or energy-efficient machinery as a pure cost—wasted spending that reduces profitability. But such expenses should instead be seen as investments that enhance productivity and in turn promote economic development.

Not only can these investments lead to lower costs for energy use and waste disposal, they may also direct innovations in the production process itself that could increase the firm’s long-run profits. This benefit is based on the Porter Hypothesis, named after Harvard Business School professor Michael Porter. According to studies conducted by Porter, properly and flexibly designed environmental regulation can trigger innovation that partly or completely offsets the costs of complying with the regulation.

The positive aspects of environmental regulation are often overlooked not only by American industry, but also by economists who model the costs of compliance without including its widespread benefits.

In fact, lazy economists refuse to analyze and integrate into their economic benefits the following: 1) reduced mortality, 2) fewer sick days for workers and school children, 3) reduced health-care costs, 4) increased biodiversity, and 5) mitigating the cost-effectiveness of climate change on public safety and disaster relief efforts.

Most mainstream economic models leave these benefits out of their calculations. Even the Environmental Protection Agency, the current scapegoat of fear mongering right wing politicians and their voting flock, which recently released a study of the impacts of the Clean Air Act from 1990 to 2020, compared the effects of a “cost-only” model with those of a more complete model. In the corporate promoted version - which only incorporated the costs of compliance, both GDP and overall economic welfare were projected to decline by 2020 due to Clean Air Act regulations.

However, once the costs of regulatory compliance were coupled with the economic benefits, the same model showed that both GDP and economic growth would increase over time, and that by 2020 the economic benefits would outweigh the costs. Likewise, the Office of Management and Budget found that to date the benefits of the law have far exceeded the cost, with an economic return of between $4 and $8 for every $1 invested in compliance.

Environmental regulations do affect jobs. But contrary to claims by polluting industries and their bought and sold congressional Republican politicians, efforts to protect our environment will actually create jobs. For example, in order to reduce harmful pollution such as dioxins from power plants, an electric company would have to equip plants with scrubbers and other technologies. These technologies would need to be manufactured and installed, creating jobs for people in the manufacturing and construction industries.

The official unemployment rate in the United States is still quite high, by conservative estimates hovering around 9%. In this economic climate, cowering politicians are more sensitive than ever to claims that environmental regulation could be a job-killer. By framing investments as wasted costs and relying on incomplete economic models, polluting industries have consistently – and successfully – fought environmental standards.

It’s time that citizens and scientific experts force politicians to change the terms of the environmental debate. We need to move beyond the lies and ignorant fear-mongering about the costs of environmental regulations and start intelligently identifying and capturing the economic benefits to our nation.