Regulatory Red Herring: The Role of Job Impact Analyses in Environmental Policy Debates

The current debate on jobs and environmental regulation too often relies on thinly-supported forecasts about jobs “killed” or “created” by public protections. In this debate, the larger costs and benefits of protections for clean air or water can get lost.

In Regulatory Red Herring, the Institute for Policy Integrity at NYU Law looks at how economics can be used to estimate or distort the effects of environmental regulation on layoffs and hiring. Through the choice of datasets or economic models, job impact analyses used in advocacy can tell widely different stories. These modeling tools have important limitations that are rarely communicated, leading to misunderstanding and counterproductive political debates.

For example, the American Coalition for Clean Coal Electricity estimated that two EPA rules on power plant emissions would trigger a 1.4 million job loss; meanwhile, using a different model and different assumptions, the Political Economy Research Institute predicted the same two rules would generate a 1.4 million job gain.

Regulatory Red Herring makes a number of recommendations to reduce the misuse of job impact statements in the public policy debate—including the need to conduct full cost-benefit analysis, that incorporates both the positive and negative employment effects. The report has received significant positive media attention, including the Washington Post and Bloomberg.

The full report can be downloaded here.