July 7, 2011
by Diana Furchtgott-Roth
Most Americans know the biggest problem in America today: too few jobs.
Yet, by executive action alone, President Obama could create more jobs without spending another dime, generating billions of additional dollars in income tax revenues for Treasury coffers.
Economists forecast that the Labor Department will issue disappointing job creation numbers on Friday, partly because it's getting harder to create jobs due to our regulatory environment.
Regulations are controlled by presidential appointees at agencies such as the Environmental Protection Agency and the Labor Department, which are part of the executive branch, and at "independent" agencies, such as the National Labor Relations Board, which has quasi-judicial functions.
Tougher regulations lead employers to locate elsewhere. Friendlier regulations draw them back home.
Mr. Obama acknowledged this when, on January 18, 2011, he issued Executive Order 13563, entitled Improving Regulation and Regulatory Review.
Each agency is supposed to make a plan to "periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives."
While Mr. Obama knows that burdensome regulations crimp job creation, his agencies continue to interfere with private sector job creation. Here are just a few examples.
The acting general counsel of the National Labor Relations Board, Lafe Solomon, wants to stop the Boeing Company, which has a backlog of over 800 Dreamliner aircraft on order, from using its new aircraft manufacturing plant in South Carolina to build Dreamliners.
Mr. Solomon has charged that Boeing's decision to build a new plant at North Charleston, South Carolina, to expand production of its Dreamliner 787, was made in retaliation for strikes at its Everett, Washington plant in 2005 and 2008, even though Boeing has added workers in Washington State since the strikes.
Mr. Solomon's charge was brought in response to a complaint from the International Association of Machinists and Aerospace Workers, which represents Boeing employees in Washington State.
The NLRB's action is sending a job-chilling signal to foreign and domestic companies which might want to locate plants in America. If Boeing had built its new plant in China, the NLRB would lack any authority over it.
Or, take regulations affecting coal, which accounts for 45 percent of American electricity production. The Environmental Protection Agency is developing regulations to restrict coal ash emitted into the atmosphere. It wants to impose tighter standards for nitrogen dioxide, sulfur dioxide, and other particulates, and new standards for water and carbon. The Agency asserts that these more restrictive limits are necessary to protect public health.
However, EPA states on its Web site that U.S. air quality has been steadily improving since 1980. "Since 1980, nationwide air quality, measured at more than a thousand locations across the country, has improved significantly for all six principal pollutants. These common pollutants are ground-level ozone, particle pollution, nitrogen dioxide, carbon monoxide, sulfur dioxide, and lead."
To deprive Americans of jobs at this time for the sake of yet cleaner air seems callous indeed. Can't further air improvements wait until the unemployment rate has declined?
And the links between improved air quality and health are unclear. At the same time as air quality has been improving, the incidence of asthma, a disease commonly associated with polluted air, has been increasing. Between 1980 and 2001, as measured air quality was improving, the prevalence of asthma tripled, according to the Centers for Disease Control.
Meanwhile, by coincidence or design, the Labor Department has been ratcheting up safety standards for coal miners. EPA regulations will discourage coal from being burned in power plants, but it can be mined and exported. Coal exports are significant, 76 million tons in 2010, 23 percent higher than in 2009.
Proposed Labor Department regulations, if made final, would discourage coal from being produced at all. Over 30 new regulations for coal are on the Labor Department's regulatory agenda.
These regulations discourage coal production, causing unemployment of miners and others in mining communities. Moreover, by making the use of coal more expensive, the government discourages energy-intensive industries, such as manufacturing, from locating in the United States, in effect, encouraging them to flee abroad.
Another proposed Labor Department regulation is affirmative action for women on construction sites. Discrimination is already illegal in the construction industry. In practice, this rule would require construction companies to employ less-qualified women.
With the construction industry still sick from the recession, and women's unemployment rates almost a full percentage point lower than men's, this is not the time to force construction companies to employ women.
Then, consider drilling in the Gulf of Mexico. The BP oil spill occurred 15 months ago, and deepwater drilling has yet to resume in the Gulf, although some shallow-water activity has started. The Department of the Interior could approve permits tomorrow and bring back some of the jobs and oil rigs lost to the Gulf states.
With high unemployment in the headlines, it's time to look at some low-cost solutions to spur job growth. How about some simple regulatory reform?
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, was a Senior Fellow at Hudson Institute from 2005 to 2011.
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