Labor Bureau: Regulations Don't Cause Major Job Losses

Monday, 14 Nov 2011 12:41 PM

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While government regulations do lead to job losses, the overall effect is minimal. Economists and federal statistics show that few job losses are a result of tougher regulations, The Washington Post reports.

The Bureau of Labor Statistics collects data from companies that lay off workers. According to data provided by company executives, 0.3 percent of those laid off in 2010 lost their jobs due to “government regulations/intervention,” while 25 percent were laid off due to a slowdown in business.

The Post also noted that while AEP is cutting 159 jobs when it closes a decades-old coal-fired power plant in Ohio due to new rules from the Environmental Protection Agency, the company is building a new natural-gas-fired plant an hour away from the old plant. Hundreds have been hired to build it and when completed next year it will employ 25.

“If you’re a coal miner in West Virginia, it’s not a great comfort that a bunch of guys in Texas are employed doing natural gas,” Roger Noll, co-director of Stanford University’s program on regulatory policy told the Post.

“Some people identify with the beneficiaries, others identify with those who bear the cost, and no amount of argument is ever going to change their minds,” Noll added.

Economists say that there is little evidence that regulations bring about massive job losses and rolling them back do not lead to a job boom.

“Based on the available literature, there’s not much evidence that EPA regulations are causing major job losses or major job gains,” Richard Morgenstern, who worked at the EPA starting under the Reagan administration, told the Post.

A study by Morgenstern and others looked at the effect of regulations on pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills between 1979 and 1991 concluded that higher spending to comply with environment rules did not cause “a significant change” in industry employment and when jobs were lost they were often made up in the same industry.

“The notion that we should deregulate everything because we have a recession is completely wrongheaded,” Noll said, adding the government could outlaw tractors and create jobs in the fields but that “would not be a legitimate social goal.”

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