NCPA - National Center for Policy Analysis


December 15, 2005

Decades of "green" regulations have significantly dampened the growth of the American worker's real wages, say the Independent Institute's Carl P. Close and Craig S. Marxsen.

To see why, it is helpful to review some economic history:

  • Economists have noted a slowdown in the growth of output in the U.S. economy from the early 1970s to the mid 1990s.
  • After 1973, when the cool-off began, the annual increase in real gross domestic product (GDP) fell from 3.6 percent per year to 2.8 percent.

In response to pressure to reduce environmental compliance costs, the Environmental Protection Agency (EPA) recently selected only 42 regulatory reforms to implement. These reforms were taken from a list of more than 700 suggested by the public, according to an agency official who testified at a congressional hearing on the issue last September.

This may seem promising but is insufficient, say Close and Marxsen:

  • Lawmakers should require the EPA to explain, case by case, why it rejected the vast majority of reforms suggested by the public.
  • Making the agency more transparent would help make it more accountable, as well as facilitate needed reform.
  • Similarly, state lawmakers should make state-level environmental agencies more transparent.

More importantly, Congress should reduce the EPA's discretionary authority. It empowered the agency at a time when predictions of imminent economic meltdown from resource depletion and deadly pollution faced little skepticism. Those predictions haven't panned out except in one respect: They fertilized a federal bureaucracy that has imposed huge economic costs -- costs that have disproportionately dampened the growth of productivity, and thus workers' earnings, say Close and Marxsen.

Source: Carl P. Close and Craig S. Marxsen, "Why Are Workers Earning Less Than They Used To?" TCS Daily, December 2005.

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