The Washington Post had an interesting article yesterday highlighting that business demand is the number one reason for job layoffs, not regulations.
“In 2010, 0.3 percent of the people who lost their jobs in layoffs were let go because of “government regulations/intervention.” By comparison, 25 percent were laid off because of a drop in business demand.”
Economists also do not find a casual link:
“Based on the available literature, there’s not much evidence that EPA regulations are causing major job losses or major job gains,” said Richard Morgenstern, a senior fellow at the nonpartisan think tank Resources for the Future who worked at the EPA starting under the Reagan administration and continuing into President Bill Clinton’s first term.
A decade ago, in a landmark study, Morgenstern and others looked at the effect of regulations on four heavily polluting industries — pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills — between 1979 and 1991.
The researchers concluded that higher spending to comply with environment rules does not cause “a significant change” in industry employment. When jobs were lost, they were often made up elsewhere in the same industry.”
This is an important perspective, given the loud cry from the coal industry that regulations are killing jobs in the region. As good economists and the BLS already know, the real problem facing industry is a lack of consumer demand, not regulation.
Bottom line: Regulations both eliminate and create jobs and their net effect tends to be small.
