Economists call it "the jobs multiplier effect" – each new job created in turn supports other new jobs. A new pool of workers means new salaries being spent in local economies for everyday needs at places like the supermarket, the car dealer, or the dentist.
The jobs multiplier can also work in the opposite direction when people are laid off, causing a domino effect of job losses due to decreased spending in local communities. And that’s exactly what’s happening today. The regulatory attack of President Obama’s EPA on affordable electricity is unleashing a negative multiplier effect that is resulting in lost jobs and hurting local economies all across the country.
This is puzzling, to say the least, in that the president himself has spoken of the need to draw on all of our energy resources to meet our electricity needs. But his Environmental Protection Agency clearly has a different agenda.
Since 2009, EPA has been rolling out an unprecedented wave of new regulations targeting the coal-fired power plants that provide nearly half of the nation’s electricity and support thousands of jobs both directly and indirectly.
Two of these rules -- one affecting the interstate transport of power plant emissions and another that would reduce only miniscule amounts of mercury and other trace compounds -- are so costly that, if implemented, they would spark a significant number of power plant closures and job losses.
Air quality has improved substantially since the Clean Air Act was enacted in 1970 and sharply reduced emissions from coal-fired power plants have led the improvements. To build on this success, it is necessary to periodically review the effectiveness of existing standards. However, any tightening of existing regulations must be proposed with consideration to costs relative to the potential benefits that the new regulation may yield, including the impact on jobs.
EPA’s own numbers suggest that many newly proposed rules will only yield diminishing marginalreturns. For example, EPA estimates the benefit from reducing mercury emissions will only amount to 0.004 percent of the total benefits of the proposed rule; the remaining 99.996 percent of potential benefits would be attributed to coincidental reductions in other fine particles called particulate matter. And fine particles have been subject to stringent regulation under other sections of the Clean Air Act for almost 15 years.
Based on public announcements from utilities, over 28,000 Megawatts of electricity generation is at risk of being shut down across the country as a result of these rules. That’s enough electricity to power a dozen or more American cities. And that estimate does not take into consideration the eight coal-fired utility plants that the Tennessee Valley Authority (TVA) announced it would be closing as a result of a “sue-and-settle” agreement between environmentalists and the EPA.
It is not just the jobs directly related to the generation of power that would be lost. Once the multiplier effect kicks in, the consequences will extend to those individuals whose jobs depend on the buying power of those employed at these plants.
They include local service providers and merchants who would find a diminished customer base due to the loss of jobs and salaries. This is especially true in many of the nation’s smaller communities, where the local impacts would be particularly felt.
And something else happens when power plants are shuttered: We also lose a source of affordable and reliable electricity.
Without these plants, electricity bills increase, which is not only a hardship for homeowners but a job destroyer for businesses of all sizes. Whether it is a small retailer who cannot hire an additional employee due to higher power costs or a manufacturer who is being undercut by foreign competitors who pay lower electricity costs, the reverberations go well beyond the power plant employees who receive pink slips.
According to one recent study, pending and recently finalized power plant rules could cost 183,000 jobs per year nationwide through 2020, or 1.65 million job-years in total.
And in a coal-producing state like Kentucky, regulations that discourage the use of coal jeopardize the 18,000 mining jobs across the state as well as the communities that depend on them.
That is why it is important to speak out, not just for the jobs at coal-fired electric generating plants but also for all the other jobs throughout the economy that are linked to them. The House of Representatives recently passed the Transparency in Regulatory Analysis of Impacts on the Nation, or TRAIN Act, which would require a full cumulative economic analysis of specific EPA rules, while also delaying and modifying two costly rules affecting power plant jobs and the price of electricity for consumers.
No one wants to “undo” the Clean Air Act. Our goal is reasonable regulation that protects human health and the environment. But we must have a balanced approach in energy and environmental policy that controls power plant emissions without unnecessarily closing plants and resulting in massive job losses.
President Obama’s costly stimulus did not create the jobs that were promised, and his EPA’s excessive regulatory agenda is destroying what few jobs remain. Any new regulations proposed by EPA must take into account the consequences on jobs and the availability of affordable electricity to consumers across the country.
For too long, EPA has been allowed to operate without adequate legislative branch oversight and this House of Representatives is properly acting to stop that behavior. Too much is at stake for American jobs – for our economy – for us not to do so.
Republican Ed Whitfield represents Kentucky's first district in the U.S. House of Representatives. He serves as Energy and Power Subcommittee Chairman.