Do Climate Policies ‘Kill jobs’? An Economist on Why They Don’t Cause Massive Unemployment

Yves here. I don’t mean to sound churlish, but this article considers the sort of orthodox “green growth” policies that are inadequate do address the magnitude of changes we need to make merely to reduce how fast and catastrophic climate-change and population-induced damage to the biosphere occurs.

From Why “Green Growth” Is an Illusion:

Our statistical analysis shows that, to avoid a climate catastrophe, the future must be radically different from the past. Climate stabilization requires a fundamental disruption of hydrocarbon energy, production and transportation infrastructures, a massive upsetting of vested interests in fossil-fuel energy and industry, and large-scale public investment—and all this should be done sooner than later. Steffen’s analogy of massive mobilization in the face of an existential threat is fundamentally correct. The problem for most economists is that it suggests directional thrust by state actors, smacks of planning, coordination, and public interventionism, and goes against the market-oriented belief system of most economists. “Economists like to set corrective prices and then be done with it,” writes Jeffrey Sachs (2008), adding that “this hands-off approach will not work in the case of a major overhaul of energy technology.” We thus have to discard the prevalent market-oriented belief system, in which government intervention and non-market modes of coordination and decision-making are inferior to the market mechanism and will mostly fail to achieve what they intend to bring about. Without a concerted (global) policy shift to deep de-carbonization (Sachs 2016; Fankhauser and Jotzo 2017), a rapid transition to renewable energy sources (Peters et al. 2017), structural change in production, consumption and transportation (Steffen et al. 2018), and a transformation of finance (Mazzucato and Semieniuk 2018), the decoupling will not even come close to what is needed (e.g. Storm 2017).

Political support for such a strategy of deep de-carbonization is not in the cards—not just in the U.S., but also in Brazil, Australia, and elsewhere. Ostensibly more progressive “green growth” approaches unfortunately remain squarely within the realm of business-as-usual economics as well, proposing solutions which rely on technological fixes on the supply side and voluntary or “nudged” behavior change on the demand side, and which are bound to extend current unsustainable production, consumption and emission patterns into the future. The belief that any of this half-hearted tinkering will lead to drastic cuts in CO2 emissions in the future is plain self-deceit.

By Garth Heutel, Associate Professor of Economics, Georgia State University. Originally published at The Conversation

Climate change will hammer the U.S. economy unless there’s swift action to rein in greenhouse gas emissions from burning fossil fuels, according to the latest National Climate Assessment report.

But President Donald Trump has dismissed this forecast, even though his own administration released a comprehensive synthesis of the best available science, written by hundreds of climate scientists and other experts from academia, government, the private sector and nonprofits. Like most opponents of policies aimed at slowing the pace of climate change, he has long wanted actions to reduce these emissions off the table because, in his opinion, they are “job-killing.”

As an environmental economist who is studying the relationship between regulations and employment, I find this question vitally important both economically and politically. What does the research on this question say?

Arguments

Opponents of climate regulations embrace a straightforward and long-standing argument. In their view, anything the government forces businesses to do will negatively affect their ability to employ workers. To them, everything from safety regulations to raising taxes makes it costlier and harder for businesses to operate.

Trump has taken this philosophy to heart by pledging to eliminate what he calls “job-killing regulations” across the board.

Some supporters of strong climate policies counter that the costs of climate change are high enough to justify climate policies even though they might negatively affect workers.

They base this argument on observations that environmental rules and clean energy can benefit public health, even by saving lives. They also point out that these policies could counter the economic damage the National Climate Assessment forecasts.

Evidence

What about those jobs, though?

The evidence on how environmental policies affect unemployment is generally mixed. The book “Does Regulation Kill Jobs?,” edited by University of Pennsylvania professor Cary Coglianese, covers regulations generally. It concludes that “regulation overall is neither a prime job killer nor a key job creator.”

Michael Greenstone, a University of Chicago economist, found that 1970s-era environmental regulations, which in some ways resemble the climate-related rules debated today, led to the loss of more than half-a-million manufacturing jobs over 15 years.

Another team of researchers, which reviewed the impact of environmental policies on four heavily polluting industries, found that environmental regulations have no significant effect on employment.

To be sure, the number of coal mining jobs has plummeted, falling from over 150,000 in the 1980s to about 53,000 in July 2018.

But this mainly has to do with two other factors. Due to increasing automation, it now takes far fewer workers to mine coal than it used to.

And a drilling boom has increased not just oil output but natural gas production. The increased natural gas supply cut prices for that fuel, prompting a raft of coal-fired power plant closures. It also eroded coal’s market share for electricity generation while creating new jobs in other energy industries.

Greener Job Growth

A weakness I often see in the standard regulations-kill-jobs argument is a focus on the regulated industries that ignores the fact that those same regulations tend to spur growth in other industries.

In this case, climate policies are proving to be a boon for jobs in renewable energy industries like wind and solar, as well as in efficiency efforts like weatherization.

For example, the stimulus bill enacted during the Great Recession included provisions designed to bolster renewable energy.

That spending helped spur the creation of millions of new jobs. The Bureau of Labor Statistics, a federal agency, predicts that the number of solar panel installers will increase by 105 percent and the number of wind turbine technician jobs will rise by 96 percent between 2016 and 2026, making those the nation’s two fastest-growing professions.

The power the U.S. gets from wind, which increased more than 30-foldbetween 1999 and 2017, now accounts for 6.3 percent of total electricity.

One study concluded that retraining all coal workers to become solar panel installers is feasible and in fact would mean a raise for most of these American workers. More than twice as many Americans work in the solar energy industry than in the coal industry.

The Whole Employment Picture

So what is the net effect on jobs when some energy industries shrink and others grow?

Resources for the Future, a think tank that researches economic, environmental, energy and natural resource issues, has developed complex computational models of the economy that clarify the whole picture on the connection between regulations and jobs.

The nonprofit, nonpartisan group assessed the impact on unemployment, something that – believe it or not – these large-scale economic simulations usually don’t do.

The think tank predicts that a hypothetical US$40 per ton carbon tax, which would translate into an increase of about 36 cents per gallon of gasoline, would increase the overall unemployment rate by just 0.3 percentage points. The effect is even smaller, at just 0.05 percentage points, if the government were to uses the carbon tax’s revenue to cut other tax rates.

This effect is one-third as large as previous estimates, such as a 2017 study from NERA Economic Consulting, a global firm, that were not as detailed in their unemployment modeling.

Some studies have even detected a net gain in jobs from climate policies.

For example, University of California, Berkeley researchers found that California’s efforts to cut emissions have bolstered the state’s economy and created more than 37,000 jobs. And the University of Massachusetts, Amherst Political Economy Research Institute has determined that every $1 million shifted from fossil fuel-generated power to “green energy” creates a net increase of 5 jobs.

Based on my review of the research, I see little evidence that policies to reduce pollution from fossil fuels have or will likely result in widespread job losses.

Different Options

Different types of policies can have different effects – and some can minimize labor market disruption more than others.

A carbon tax, like other revenue-raising policies such as cap-and-trade systems with auctioned permits, has the advantage of generating revenue that can be used to offset any economic harm from job losses. Policies that do not generate revenue, such as renewable portfolio standards, which require utilities to get a set proportion of their electricity from renewable energy, lack this advantage.

Despite the spread of these efforts in states, there is no federal carbon taxor cap-and-trade system yet.

The evidence suggests that climate policies will cause some industries to lose workers, while others will employ more people and that the overall employment effects are modest. But what is going on with displaced workers? Are solar and wind companies hiring all the jobless coal miners?

My current research is examining how easy – or hard – it is for workers to move between industries due to changes brought on by these regulations. So far, my colleagues and I are finding that when we account for the costs of workers switching jobs, unemployment rates rise slightly more than predicted when ignoring those costs, but the overall effect on unemployment is still just 0.5 percent.

We also are seeing that the effects are much more severe for some workers, such as coal miners. That is why I believe that the government would be wise to do more to train dislocated workers for new professions and help them land new jobs while at the same time implementing climate policies.

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20 comments

  1. rd

    When Congress killed the Stream Protection regulation, they didn’t realize they were killing a job-creating bill.

    The coal mine industry didn’t want to protect streams as it would hamper coal mine development. However, coal mines themselves today don’t make many jobs and there will probably be far fewer in the future as much of the machinery inside the open pit mines become autonomous.

    However, protecting streams is labor-intensive which is why the mine companies don’t want to do it. so there would likely have been fewer mines but as much or more jobs with the Stream Protection Regulation in place. The companies would likely have had less revenue and less profits because more of the profits would have been left in the communities in jobs.

    Environmental protection acts from the 70s and 80s have been similar. There are lots of jobs in environmental protection, remediation, and restoration that weren’t in existence before the Clean Air, Clean Water, RCRA, and Superfund Acts. We still have chemical plants, refineries etc. When companies started looking hard at their operations, they started realizing just how much product revenue and cost they had literally flushed down their sewers and saved money by tightening up their operations.The primary downside of the acts is we can now breath our air and drink our water.

    Reply
    1. jrs

      besides which jobs would you rather have and would you feel good about doing? Ok noone can infinitely retrain (although retraining would be viable for many IF it was paid for and led to actual work, the problem is it hasn’t led to work), but there are also whole future generations preparing for the workforce that have a choice now of which jobs to prepare for.

      Quality of jobs matters if one actually sees people as human beings with consciences and hopes and not just industrial cogs plugged into jawbs to generate paychecks.

      I don’t know about climate policies being pro-job, I mean the commutes everyone is doing to get to jobs are pretty damaging to the world by themselves, but creating junk jawbs destroying the world much more directly, isn’t doing people that much of a favor.

      Reply
      1. Wukchumni

        Book Tip: Not So Rich As You Think, by George Stewart.

        A very early treatise on ecology, recycling, etc., from 50 years ago that was very prescient. Stewart is one of my favorite authors and could write with authority on a myriad of subjects, from the Donner Party to Pickett’s Charge and westward expansion and more, with great elan.

        Earth Abides by the same author from the late 1940’s, is the original post apocalyptic novel, and the best in my opinion.

        Reply
    2. knowbuddhau

      So true. Could be making a living: finding wetlands, educating people about what that means for living adjacent, how utterly cool and dynamic places they are. Our denatured nature is abundantly evident when people try to put plans for dream homes on real ground.

      I’ve always wanted to see a map of the world as imagined by all the shorting of environmental protections. Defining the built/natural boundary, in real time, on real ground, is very revealing.

      One of the things that’s got to go is this magical belief in a land called Away.

      I take a cognitive behavioral approach. You can change your mind to change your behavior, and vice versa. And as has been said, the personal is political. I’d rather not commute 200 miles/week. I need to change the way I see the world of possibilities, maybe even agitate for the change I want, not just hope for the best from a government in which I have no real hope.

      But I also buy the occasional lottery ticket. You never know. I’ll take almost whatever help I can get.

      Reply
  2. kgw

    Our “problem” is that those in law enforcement are given huge emoluments, thus they are increasingly beholden to those who are destroying the spreading of the awareness of the evolution of human awareness. If voting mattered it would be against the law…

    Reply
    1. drumlin woodchuckles

      The Republicans ( and possibly some others now) have been working very hard to make it against the law for Blacks, Poors, Youngers, etc. to vote. They must think it matters if these groups of people vote.

      And the whole Digital Elections-Industrial Complex conspirators are working to destroy the possibility of the votes-as-really-cast being counted-as-really-cast from being an expectation on anyone’s part. They must think that Clean Analog Elections matter, otherwise they wouldn’t be trying to “outlaw” Clean Analog Elections

      Reply
      1. Louis McFadden

        Please cite source on the difficulty of voting.

        Are you that racist to believe that Blacks, Poor and Young are unable to get identification?

        If so you truly believe that these groups don’t buy alcohol or cigarettes. They don’t drive or ever fly…you have to either be really ignorant or a flat out racist to believe any of this

        Reply
        1. UserFriendly

          Because some black/young/poor people smoke/drink/fly all black/young/poor people must have ID’s? Surely you can use logic better than that. If you are so worried about illegal voting then mandate the government generate free ID’s for all citizens without them asking. Those are the options.

          Reply
  3. MyLessThanPrimeBeef

    Sometimes we do what we need to do, regardless of cost (in this case, jobs). Take the following sceario, for example.

    If we say over-population is a problem and if we can lower the birth rates, in the short term, there will be fewer babies (who won’t be working for at least 18 more years, for most of them) and fewer jobs to take feed, nurture and develop them.

    In about 18 years, there will be fewer workers entering the work force. So, that will lessen the need to create more jobs.

    All along, the economy or the GDP will be smaller (assuming everything else being the same – i.e. consumption per person, etc).

    Reply
    1. Louis McFadden

      And how do you pay for the larger generation that is retired when you have a smaller tax base?

      Does anyone ever really think about thw future in realistic terms?

      Yes you have to pay for pensions and the healthcare that goes along with it

      Reply
  4. Darthbobber

    So resources for the future’s study deals only with the single element of a $40 per ton carbon tax (and blithely assumes return of the money to households via rebates.)

    So what would this alone actually contribute to achieving the needed reductions? I don’t see it as getting us all that close.

    Nor do they deal at all with the quality of employment. In an environment where millions find it perfectly possible to be fully employed AND destitute, this matters somewhat.

    We seem hellbent on “proving” by such means as my be necessary, that a crisis of this magnitude can be adequately dealt with purely by nudging markets through manipulations of the tax structure.

    Reply
  5. Darthbobber

    “One study concluded that retraining all coal workers to be solar panel installers is feasible” But when you click through to that study, it doesn’t deal at all with the fact that the coal workers are concentrated in a handful of areas, which do not, in themselves, contain anything like enough potential solar jobs at all, much less solar panel installers specifically, to employ the required number of coal workers anywhere within a few hundred miles of where they presently live.

    So such a solution requires the migration of most of the effected workers and their families, and the not inconsiderable expenses associated with that. It also implies the final death knell for more than a few towns.

    Not to say that this is literally undoable, given the needed resources and commitment, but the fact that something billed as a feasibility study sees no need to deal with the issue at all makes me suspect that we’re at least as much in the realm of propaganda as of problem solving.

    Reply
    1. rd

      Many of those areas are amenable to wind turbines which is another source of jobs.

      Appalachian coal is mainly metallurgical coal these days which is used to make steel and is not easily replaced by something like natural gas. So doing this in a responsible manner with protected streams would lead to jobs.

      Reply
      1. Darthbobber

        There’s a part of Kansas where my mom’s family originally hailed from, where farmers in an area probably half the size of West Virginia all put wind turbines on their land. Don’t know how many people were involved in the installation, but there’s no visible sign of any ongoing local employment from them.

        Reply
  6. knowbuddhau

    Couldn’t agree more with this: “We thus have to discard the prevalent market-oriented belief system.” But what if the people who need to do the changing don’t think they even have a belief system?

    Being market-oriented is an expression of a way of being human. After growing up as an employee, and now turning into a self-employer, I see that there’s more to those categories than just how you get paid.

    The contrast is even greater for going co-op. Strictly speaking, you are not “in” a co-op, you *are co-operative. You can tell because the “extra” effort (the meetings never end, and we do “leave money on the table”) isn’t felt as a burden. It’s just what you do.

    Funny thing about BS’s: you can’t see them from inside them. People with MOBS don’t think they’re expressing “beliefs;” it seems to be the self-evident way the world works. Same goes for every one of us.

    Look at the list of things that need changing decades ago already:

    a concerted (global) policy shift to deep de-carbonization (Sachs 2016; Fankhauser and Jotzo 2017), a rapid transition to renewable energy sources (Peters et al. 2017), structural change in production, consumption and transportation (Steffen et al. 2018), and a transformation of finance (Mazzucato and Semieniuk 2018),….

    How are the people responsible going to do any of that without examining and revising their own ways of being human on a daily basis?

    It’s by enacting our beliefs through our daily ways of being human that we express societies and economies. Our material realities come from our beliefs. But there’s that funny thing about them, again.

    It’s always other people who have them, and need to change them, amirite? All we need do is revise what it means to be human today, inevitably involving the nature of existence and our proper role in it. IOW, same same only different in the NC commentariat.

    Another problem, is that people don’t take kindly to having their BS even brought to mind, much less directly questioned. Our BS is supposed to operate in the background. It’s not polite to ask about the odor.

    I’m greatly encouraged to see broached the field from which I see most of our problems arising in the first place. Likewise, Prof. Black’s Douthat smack-down is a tour de force.

    Neoliberalism isn’t just about markets, it’s a way of being human in the world that expresses itself in particular types of markets, among many other things. I believe we can address both aspects at once.

    Reply
    1. knowbuddhau

      Oh yes, forgot the bit about the banishment of beliefs beyond the Pale of scientific respectability. It wasn’t all B.F. Skinner’s fault.

      The history of it goes back further. There for a long time, late 18th–early 20th centuries, it was thought that reason had triumphed over passion. The etymology of “ideology” and “mythology,” are instructive. And it involves Thomas Paine.

      The first recorded use of mythology to mean, “a body of myths,” was 1781. 15 years later, 1796, ideology came into use. In between, exiled in France, Thomas Paine wrote Age of Reason, strongly influencing the revolutionaries. The French Revolution went from May, 1789–November, 1799.

      The 19th century was one of near continuous scientific revelation. Bernays, most notably.

      In the 20th century, all mention of beliefs, especially intentions, was banished from radical behavioral psychology. The APA went and based itself in an “outdated,” Newtonian physics, Robert Oppenheimer called it, at an APA convention in the 50s. The same APA that would later have no problem with official US torture.

      But then there were those awe-inspiring Nazis, notably Goebbels and Riefenstahl. We directly imported many Nazis and their methods. The history of the manufacture of consent, I presume, is well known here.

      Neoliberalism owes its ascendancy to mass bloodshed and propaganda, not prevailing in scholarly policy debates. It’s been done with corruption, assassination, theft of the trappings of office, etc. It’s easy to get your policy adopted, when your opposition “disappears,” it’s well known you torture, and you have an actual army to physically assert control.

      Michael Hudson calls it a cover story, and I agree. (Then what’s the real story?) Reducing it to market orientation doesn’t do its victims justice, or prepare us for perfectly foreseeable backlash.

      Reply
  7. NoFreeWill

    “Our statistical analysis shows that, to avoid a climate catastrophe, the future must be radically different from the past. Climate stabilization requires a fundamental disruption of hydrocarbon energy, production and transportation infrastructures, a massive upsetting of vested interests in fossil-fuel energy and industry, and large-scale public investment—and all this should be done sooner than later. ”

    All that is necessary is negative GDP of levels never seen since the birth of capitalism, this definitely won’t affect anyone’s jobs… it’s not like the restructuring of the entire socioeconomic system necessary to survive global warming (and prevent human extinction) will cause massive disruptions whose burdens will largely fall on the poor… oh wait

    Reply
  8. Darthbobber

    There’s a part of Kansas where my mom’s family originally hailed from, where farmers in an area probably half the size of West Virginia all put wind turbines on their land. Don’t know how many people were involved in the installation, but there’s no visible sign of any ongoing local employment from them.

    Reply
  9. Knute Rife

    While it is unlikely that a climate change policy would kill jobs, it is highly likely lack of a policy will soon kill employment as we know it.

    Reply

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