The Clean Air Act and the Jobs vs. Regulations Myth

In response to a congressional request, the U.S. Environmental Protection Agency (EPA) recently prepared a white paper on the effects of the Clean Air Act (CAA) on jobs and the economy. The paper summarizes the empirical evidence on the economic costs and benefits of the act since 1970. The evidence illustrates the many benefits of the CAA and the small impact of pollution controls on employment.

EPA produced the white paper in response to a request [1] from Reps. Henry Waxman (D-CA) and Bobby Rush (D-IL), members of the House Committee on Energy and Commerce. In their letter to EPA Administrator Lisa Jackson, they requested "your best information regarding the effects of the Clean Air Act on job creation and economic growth." Both EPA and the CAA are under attack from corporations and their allies in Congress who want to limit the agency's authority to regulate under the law.

The EPA's review of the empirical evidence of the CAA includes both the benefits that result from implementation of the act and the costs imposed on regulated entities. The white paper discusses studies conducted by EPA, as well as many studies conducted independently by the Office of Management and Budget (OMB) and a range of scholars and organizations.

As has been the case for decades, significant rules promulgated by agencies under mandates from Congress almost always result in economic benefits exceeding costs. This cost-benefit analysis has been a key part of the federal regulatory process. In the case of the CAA, the white paper concludes that:

• The public health protections that have resulted from the act have produced "tremendous economic benefits"
• The standards implementing the act have created jobs in some sectors of the economy that offset job losses by regulated entities
• Because pollution abatement costs are such a small part of overall manufacturing costs, they have a very small impact on plant location decisions and employment

In assessing the economics of protecting public health, the white paper draws on past studies by EPA and others that show the economic benefits of preventing lost productivity, sick days, and deaths from respiratory illnesses, asthma, and bronchitis, for example. "In addition to healthier and more productive workers, lower air pollution translates into lower health care expenditures," according to the paper. Collectively, these benefits total trillions of dollars.

Investments in pollution abatement create jobs in labor-intensive production of control technologies and have helped U.S. companies compete internationally, according to the paper. One study cited concluded that even heavily regulated industries like refining and pulp and paper industries gained jobs as a result of environmental spending.

EPA's paper contradicts the widespread notion that pollution abatement costs are a huge burden on manufacturing. Citing surveys of manufacturers, the paper reports abatement costs are less than one percent of total manufacturing costs and that these costs consistently represent less than 0.3 percent of the nation's gross domestic product (a measure of the nation's overall economic activity).

Both EPA's white paper and Jackson's letter to Waxman and Rush illustrate the support that exists for clean air standards in the business community and among labor groups. For example, the white paper reports that in December 2010, 14 business organizations representing 60,000 businesses sent a letter to Congress and President Obama supporting EPA's clean air mission. The companies strongly supported [2] the agency and expressed concern over the delay in issuing an updated ozone rule.

The economic and public health benefits cited by these businesses and illustrated in economic analyses undercut the myth accepted on Capitol Hill that all businesses oppose public protections because they kill jobs and harm profits. Yet Republicans in the House have moved to restrict EPA’s ability to regulate under the Clean Air Act. They do not provide data demonstrating adverse impacts on jobs or the economy. Instead, they rely on wish lists from companies and trade associations, such as those solicited by Rep. Darrell Issa [3], chair of the House Oversight and Government Reform Committee. In light of the evidence of the benefits that society gains from laws like the Clean Air Act, Congress could better spend its time debating how to strengthen public health and safety, not actively working to undercut these protections.