Federal regulation can be good for jobs

WASHINGTON (PAI) – With Right Wing Republicans in Congress and the states aiming to trash federal and state regulations on everything from clean air to child labor, the Economic Policy Institute stepped forward with a comprehensive analysis rebutting GOP claims that federal rules cost jobs. Indeed, EPI says, rules may create jobs, especially for construction workers.

Using examples of environmental rules and financial regulations and wide surveys of the impact of regulations since 1990, the analysis also shows how a retreat backwards to lack of rules would harm workers and consumers and cost the economy money and productivity.

And GOP plans could actually make things worse, added Gary Bass, head of OMB Watch, a non-partisan group that analyzes the federal budget and rulemaking.

“If we were to turn back the clock completely” to a time of little or no regulation, as many Republicans and the business community advocate, “the probability of financial collapses,” such as the one that triggered the Great Recession “would greatly increase,” Bass said.

The Great Recession was preceded by years of deregulation, no regulation of new financial markets – such as derivatives – and little to no regulation of the housing and housing securities markets.

Its bubble of sub-prime mortgages, which financiers repackaged as top-rated securities, which then collapsed, caused the crash. That shot the jobless rate up to a high of 10 percent and led to the banking crash. Joblessness only recently started dropping.

EPI’s report laid out examples of where regulation either helps create jobs – in meeting anti-pollution requirements – and where doom-and-gloom job loss estimates due to regulation, especially by industry, were wildly off base.

The EPI report focused on environmental regulation in particular, because that’s where most of the studies of the costs and benefits of regulations have been done, and where the data is most comprehensive. It’s also the regulation area where industry’s screams have been the loudest.

The building trades have enjoyed hundreds of thousands of man-hours of work performing pollution retrofits of coal-burning power plants to bring them in line with the Clean Air Act. Petroleum, plastics and pulp paper mills have also been upgraded.

“If demand is relatively inflexible to price, and if the pollution abatement activities require intensive labor inputs, then the net effect of the regulation even within the affected industry may be positive,” EPI reported.