The Zombie Myth of Job-Killing Regulations
Some ideas never die, no matter how much evidence piles up against them.
With the Labor Day weekend coming up, let’s talk about jobs. Some myths are like zombies in two ways. They refuse to lie down and die, not matter what you do. And if you aren’t careful, they can eat your brain. An example is the idea that environmental regulation kills jobs. Tragically, this brain worm seems hard to root out. But the evidence doesn’t support it. Consider what happened to manufacturing jobs under Trump and Biden, putting aside the COVID era.
Trump was the most anti-regulatory president we have ever had. If Trump’s deregulation did have an effect on manufacturing employment, however, it seems to have been quite small, while manufacturing jobs also grew under the pro-regulatory Biden.
Here are the numbers. According to BLM statistics, there were 12.3 million U.S. manufacturing jobs at the end of 2016 at the end of Obama’s presidency. After frenzied deregulation by Trump, there was a small increase. Just before COVID struck, we were up to 12.8 million manufacturing jobs in December 2019, an increase of less than 4%. At the end of 2023, after COVID and three years of strenuous regulatory action by Biden, manufacturing jobs had risen again to nearly 13 million, higher than Trump’s peak number.
A social scientist, of course, would want to control for other factors in determining the effect of environmental regulation on jobs. And in fact, the idea that regulations destroy jobs has been carefully studied by social scientists. The conclusion is that, while regulations destroy some jobs and create others, the net effect is minor.
Given the lack of evidence to support it, why has the idea that regulations are a massive threat to jobs hung on so long? There are three reasons. First, regulated industries have a big stake in promoting this myth. They also have a lot of money to devote to this effort. Second, the connection makes intuitive sense to conservatives, and it’s hard to dislodge such preconceptions in our increasingly tribal society. Finally, layoffs are very visible and easy to attribute to regulation, while new manufacturing jobs don’t carry the same oomph. Just as people overestimate the risks of air travel because crashes are so vivid, they also overestimate the degree of job loss.
Whatever the reason, I’m the myth will live on, despite the inconvenient truth that it’s completely fault. But it’s still worth pointing out the facts in the hope that someone out there might be listening. I guess that’s the job for academics, inside and outside the classroom, even if sometimes you feel half the audience is dozing off.
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About Dan
Dan Farber has written and taught on environmental and constitutional law as well as about contracts, jurisprudence and legislation. Currently at Berkeley Law, he has al…
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As of June 2019, 80% of Britain’s environmental laws were tied to EU policy. By even 2005, the EU had passed 170,000 pages of active legislation and 666,000+ pages since its inception (quoting David Haysani). I’m a good lawyer, but I can’t fathom complying with half a million pages of laws, plus an equal amount of pages of policy guidance and directives. This situation became increasingly untenable for Britain and led to Brexit. So I think there is some basis to believe that a proliferation of regulation stifles innovation and leads to paralysis. If we are going to combat climate change and improve our living environment, while not sacrificing our standard of living (in fact, we should improve it, especially in the developing world) we need innovation and an working environment that encourages, not throttles, it.
One action would reduce the need for many future tweaky regs regs, and be very effective at reducing GHG emissions: a socially just, politically durable carbon fee on fossil fuels, paid not by consumers as a surtax at the point of consumption, but by fossil fuel companies at the point of extraction/import.
Some say such a program isn’t politically feasible. Setting aside that’s a self-fulfilling statement–it can’t work if it’s never tried–it all depends on the implementation. If people see an immediate, ongoing benefit, it would.
What would the benefit be? A rebate back to consumers in equal shares in real time, monthly, funded by the fee revenue.
That’s what makes the program socially just and politically durable.
Anybody whose consumption implicates less than the average amount of upstream CO2 emissions comes out ahead. That’s most people, because the wealthy emit lots of carbon and drive the average up.
Another important implementation feature is to start low and ramp up the fee over time. That way, the pass-through costs would be minimal at first.
Businesses, seeing the structural reality of the annual increases, would squeeze carbon out of their upstream processes to stay competitive. So low-carbon would align with low-cost.
This is being tried in Canada. Unfortunately, the initial implementation was ham-handed. The rebate was buried as a tax credit you had to apply for. People didn’t make the connection between the fee and the rebate, or failed to find Schedule 14 and missed the payment entirely. The government compounded the bad marketing by naming the rebate the Climate Action Incentive. Not exactly zippy.
Say what you want about Donald Trump (don’t get me started), but one savvy thing he did was to send the 2017 tax rebates to every taxpayer in the form of a physical check that bore his signature.
The Canadian government has taken a cue. They now send a physical check quarterly that’s clearly stamped “Canada Carbon Rebate.”
Hopefully, it’s not too late to battle the snappy marketing slogan coined sometime back by the Conservative Party: “Ax the tax.”
Why are conservatives so much better at marketing? One answer is, “No” isn’t a complicated message. But “No” isn’t a viable climate policy, either. Nor are punitive taxes, or complicated regs that require consumers to become overinvolved.
Simplicity is powerful.
Can’t see how many pages of regulations led to Brexit since the vast majority of voters haven’t a clue about regulations or what it takes to implement them. They simply listen to the biased political opinions that are generally paid for by super conservatives.