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20. Environmental Regulations Create Jobs and Make American Corporations More Competitive

Source: DOLLARS AND SENSE Title: “Does Preserving Earth Threaten Jobs?,” Date: May 1997 Author: Eban Goodstein

SSU Censored Researchers: Robin Stovall and Katie Sims
SSU Faculty Evaluator: Charles Fox

Corporate lobbyists often claim that most of the jobs lost in the U.S. over the past decade were due to overblown environmental regulations. In 1990, the U.S. Business Roundtable published a study predicting that the Clean Air Act amendments would lead to the loss of between 200,000 and 2 million jobs. Six years later the job loss figure had not reached even six thousand.

Almost all economists agree that there is no trade-off between jobs and the environment. Actual layoffs from regula-tion have been quite small, and regulations have not damaged the international competitiveness of U.S. manufacturing. In 1995, in spite of spending $160 billion per year on environmental protection, the Federal Reserve decided the U.S. economy was growing too fast. Too many people employed might raise inflation rates, so the Federal Reserve hiked interest rates several times in an effort to “cool” the economy and to raise unemployment to the 6 percent level.

Environmental regulation can be expensive. But it is a mistake to confuse costs of environmental protection with job losses from environmental protection. Indeed, environmental costs translate into environmental spending, which also creates and provides jobs. Most studies find that jobs created in environmental and related sectors outweigh jobs lost due to higher regulatory costs. This leads to an actual, overall ‘net’ employment gain. Environmental spending pumps demand into the economy during recessions. Also, environmental protection is often more labor intensive than the alternative, actually leading to more jobs. Environmentally preferable means of meeting our energy needs would actually yield more jobs than our current reliance on fossil fuels and uranium.

In recent years, corporate downsizing has become a much greater threat to U.S. workers than environmental regulations ever were. A U.S. Department of Labor survey concluded that layoffs due to environmental regulation were less than one-tenth of 1 percent of all major layoffs in manufacturing. The major source of job loss has been “corporate restructuring.”

Still, aren’t we losing manufacturing jobs to countries overseas that have lax environmental standards? For decades, economists have been looking for exactly these effects; but recently most have concluded that environmental regulations have had no observable effect. This is because, for most industries, environmental costs are little more than 1 percent of total business costs. Also, most trade flow occurs between developed countries, all of which already have comparable regulations. Finally, one Harvard professor argues that regulations, while imposing short-term costs on firms, actually enhance their competitiveness over the long term.

UPDATE BY AUTHOR EBAN GOODSTEIN: “The fact that there is no significant job loss when protecting the environment is one of those surprising ‘good news’ stories. It was surprising to me when I first started to investigate the subject five years ago. The conventional wisdom (that there was significant job loss) manufactured largely by corporate PR offices, but also endorsed by significant parts of the environmental and labor movements-seemed so plausible. It is a ‘good news’ story because it means that we don’t have to worry (much) about factories shutting down or fleeing overseas as we tighten regulations to clean up our environment.

“Is the conventional wisdom changing? Possibly. Along with Hart Hodges, I wrote an article in the November/ December 1997 American Prospect (’Polluted Numbers’) which examined initial cost estimates for past environ-mental regulations, and found them to be uniformly excessive. We were pleased when President Clinton echoed those sentiments a month later in his global warming speech at the National Geographic Society. Of course, allegations of massive job loss are still being leveled against the recently-signed Kyoto agreement. But we have come a long way from 1992, when President Bush threatened to boycott the Rio Conference in order to ‘protect American jobs from environmental extremists.’

“If you’ would like more information about these issues, I can be contacted at e-mail:”

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