Donald J. Trump has more recently picked up the mantle. One of his campaign pledges was to ask department heads to “submit a list of every wasteful and unnecessary regulation which kills jobs, and which does not improve public safety, and eliminate them.” In a video released by his transition team in November, he echoed this pledge. “On energy, I will cancel job-killing restrictions on the production of American energy, including shale energy and clean coal, creating many millions of high-paying jobs,” he said. For every new regulation implemented, he said, two old regulations would be eliminated.
In some cases, the politicians do have a point: Regulations that seek to make air and water cleaner can also cause concentrated job losses in certain industries and locations. These losses are painful for the people they affect, who often have a hard time finding new employment, especially in regions where a newly-regulated industry is concentrated.
But the idea that regulations stunt job growth more broadly is not supported by research. Many of the academic studies that have explored the question find that regulations don’t decrease jobs in the overall economy. They sometimes reduce jobs in certain sectors, but they create new jobs in others. A factory that makes lead additives for gasoline might be shut down because regulations have banned lead additives. But new jobs will then be created at a factory that makes catalytic converters, which are emissions-control devices for cars. Some workers, then, benefit from regulation, while others lose. That doesn’t mean that the losses aren’t real and painful for the people who held those jobs, but the overall picture is not one that can be accurately characterized by the phrase “job-killing.”
“If you look across the entire economy and you look in the aggregate as to jobs lost as well as jobs gained by regulation, it’s generally speaking a wash,” Coglianese said.
Job loss and creation is also a normal part of any economy; some companies go out of business because their goods or services are no longer in demand, while other jobs are created as new companies emerge to fill new demands. This is not the fault of regulations, but is rather a result of business conditions, Coglianese said. That doesn’t mean companies don’t try to blame regulations for their failures. A well-known case of a copper smelter outside of Seattle highlights this point. The company, ASARCO, complained that the smelter closed because of regulations, but the factory actually went out of business before the regulations were implemented, Coglianese said.
Often, regulations affect all companies in an industry, so although businesses may have to spend more money on installing pollution-controlling devices, for example, their competitors have to spend that money too. That means they can continue to compete, because everyone is experiencing the same rise in costs.