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Government Regulations Impact Industries

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Increasing government regulations tend to have varying degrees of effect on different industries.

Even though their impacts on the broader economy may be modest, for certain industries, the impact can be quite severe.
Susan Dudley, director of the George Washington University’s Regulatory Studies Center, said in a report that the Obama administration’s own estimates shows that the regulatory changes issued for the fiscal year that ended Sept. 30, 2012, “alone imposed more costs on the economy than all the rules issued during the entire first terms of Presidents Bush and Clinton, combined.”

Have we seen impacts on the economy and, particularly employment, from the increase in regulations?

The Environmental Protection Agency, for example, is proposing increased carbon emissions limits for new power plants. Some observers say this is reducing the demand for coal.

During the 12 months ending with the second quarter of 2013, employment at coal mines dropped by almost 200 jobs in Southwest Virginia where the average wage is $73,549 compared with an average $35,318 for all industries in that region.

Some of the drop in demand may be due to the increase in natural gas production along with its low prices.

Even so, coal miners are concerned about future layoffs based on the rally that miners from Virginia and other states staged in Washington in October to protest the new EPA rules.

The Wisconsin Manufacturers and Commerce trade association, which serves a state that is the largest manufacturer of paper in the nation, said changes to the EPA’s Clean Air Act standards for area source boilers could cost Wisconsin 7,500 jobs and 11 paper mills.

The changes also could lead to a loss of 43,000 jobs across the country, according to a study conducted by Fisher International Inc., a consulting firm to the pulp and paper industry.

And the job losses are just the tip of the iceberg, according to Paul Driessen, senior policy advisor for the Committee for a Constructive Tomorrow, a conservative nonprofit on environmental and development issues.

He argues that the EPA is not considering the impact of human health in establishing policy. He argues that “EPA rules cost jobs, thereby increasing the risk of depression, diabetes, cardiovascular disease, alcohol, spousal and child abuse, and premature death among the involuntarily unemployed.”

Outside the EPA, other federal agencies also issue regulations with respect to workplace safety and workers benefit, among others.

Even though federal regulation is damping some economic growth, the overall impact to date has been small, according to a Department of Labor report that tracks the reasons for layoffs.

In the first quarter of 2013, it found that 1,686 separations (1.1 percent of all layoffs) were linked to government regulations compared with 528 (0.2 percent) in the first quarter of 2012.

About 40 percent of the layoffs during both periods were attributed to decreased business demand.

(This column first appeared in the Richmond Times Dispatch)

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