NCPA - National Center for Policy Analysis

GREEN REGULATIONS SLOWED WAGE GROWTH

November 9, 2005

Last year, federal environmental regulations cost small U.S. manufacturers $15,747 per worker -- dwarfing small firms' combined cost of tax compliance ($2,582 per worker), economic regulations ($2,577), and workplace regulations ($1,014). Green regulations may become a major public worry if the economy turns south.

But according to the Independent Institute's Craig S. Marxsen and Carl P. Close, "workers already have plenty of reason for concern because for much of the past 30 years, environmental regulations have slowed the growth of U.S. labor-productivity and workers' weekly earnings."

Marxsen and Close also contend:

  • From 1973 to 1995 "real weekly earnings -- what workers took home in inflation-adjusted dollars -- actually decreased."
  • From 1974 to 1986 "multifactor productivity -- the efficiency of labor, machinery, and other inputs working together -- had fallen about 11.4 percent short of where it would have been without the Environmental Protection Agency's (EPA) heavy hand."
  • Although productivity growth accelerated in the late 1990s, it mostly touched six economic sectors less affected by environmental regulations.

They conclude by calling for Congress to make the EPA more transparent and to reduce the agency's discretionary authority.

Predictions of eco-catastrophe, Marxsen and Close write, "haven't panned out except in one respect: They fertilized a federal bureaucracy that has imposed huge costs on businesses -- costs that have disproportionately dampened the growth of productivity and workers' earnings. The time has come for policymakers and the public to re-think their commitment to the EPA's costly environmental bureaucracy."

Source: Craig S. Marxsen and Carl P. Close, "Environmental Doom and Economic Slowdown: A Self-Fulfilling Prophecy," Independent Institute, October 27, 2005; and Robert Higgs and Carl P. Close, eds., "Re-thinking Green: Alternatives to Environmental Bureaucracy," Independent Institute, April 1, 2004.

For Higgs and Close text:

http://www.independent.org/store/book_detail.asp?bookID=58

 

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