In the News

The Institute for Policy Integrity took on the task of shining light on how job impact analysis is (ab)used in political discussion: The Regulatory Red Herring: The Role of Job Impact Analyses in Environmental Policy Debates. The executive summary provides a cogent example of the challenges in the discussion.

But on Tuesday, the Institute for Policy Integrity at New York University’s School of Law said in a new report that despite the limitations of current methods of measuring job gains and losses, they should be considered when drawing up future environmental rules.

Michael A. Livermore, the institute’s director and the principal author of the study, noted that the the oratory surrounding job impacts has heated up in recent years — for example, in the debates over new Clean Air Act rules and the Keystone XL oil pipeline. (His report noted that the term “job-killing regulations” had appeared in a sampling of American newspapers four times in 2007 and 706 times in 2011.)

The phrase “job-killing regulation” has become a standard part of the political lexicon this campaign season, most often used to disparage President Barack Obama’s energy and environmental policies.

But a new report suggests we ought to take claims of regulatory-related unemployment with a grain of salt. The Institute for Political Integrity, a nonpartisan think tank associated with the New York University School of Law, finds many of the studies purporting to show mass job losses — or gains — from environmental rules use poorly executed economic models that do not accurately measure true costs and benefits.

Someone needs to bring a little order to this chaos. And a new paper (pdf) by the Institute for Policy Integrity tries to do just that. The authors, Michael Livermore, Elizabeth Piennar, and Jason Schwartz, make two key points. First, most of the concrete estimates of job losses and gains around environmental rules are wildly misused — people basically just tout whatever study supports their pre-existing beliefs. And, second, while job impacts are important, they should be looked at in the broader context of the costs and benefits of new regulations. Job losses or gains, the authors note, “should not serve as a trump card.”

The politics of how environmental regulations affect hiring and firing is distorted by campaign rhetoric that often gives short shrift to the uncertainties surrounding economic models, New York University researchers argue in a report released today.

NYU’s Institute for Policy Integrity looked at the complex relationship between the labor market and regulations in the report and determined politicians on either side of the fight often fail to call attention to the limits and assumptions of such models.

THE Environmental Protection Agency’s proposal earlier this week to reduce greenhouse gases from new power plants was hailed by many environmentalists, but unless steps are taken quickly to bring existing plants under the rule, it will create a perverse incentive for companies to keep running older, more heavily polluting power plants. That’s bad economics that could lead to dirtier air.

The proposal would regulate carbon emissions from future power plants but leave existing sources untouched. This is yet another instance in a more than 40-year pattern under the Clean Air Act in which old and outdated technology has avoided new environmental standards. The result is continuing unhealthy levels of pollution.

“To get CCS going, you’d have to have a rule that was so strict you couldn’t even build a natural gas plant, you’d have to move to CCS,” said Michael Livermore, executive director of the Institute for Policy Integrity at the New York University School of Law. “You’d have to make CCS plants cleaner than natural gas.”

“The option of building new, efficient natural gas plants remains a viable alternative for companies that want to construct,” said Jason Schwartz, legal director for the Institute for Policy Integrity at New York University. “They’re allowed to look into the future and use their best judgment and set standards in anticipation of the growth of technology.”

“EPA’s not denying, of course, and they won’t deny, … that there’s going to be costs” from the regulation, said Michael Livermore, executive director of the Institute for Policy Integrity and adjunct professor at New York University School of Law who focuses on cost-benefit analysis. “The question is whether the costs are justified by the benefits.”

But a clear point, he said, is that the industry study is “not a prediction about gasoline” costs.

“It seems unlikely that they’ll be able to pass on 100 percent of their costs,” Livermore said of the oil companies. “If they can just pass along the costs to consumers, then why fight [the new regulations] tooth and nail?

“It’s not the role of EPA to keep every polluting business in the country open,” Livermore said. “It’s actually businesses’ job to comply with environmental regulations at the cheapest possible cost.”

Michael Livermore, executive director of New York University’s Institute for Policy Integrity, called the failure to cover existing plants “a big problem,” noting that the move might encourage utilities to keep operating conventional coal plants operating longer.

“When you want to reduce pollution, you need to go where the pollution is, and that’s existing sources,” he said, adding that when the government grandfathers existing plants and raises the standards for building new ones, “you increase the incentives to keep existing facilities around.”