The Republican media complex has been having a field day with last month’s dismal jobs report, taking the opportunity to blame every progressive achievement of the last hundred years—from Social Security to the EPA to Medicare—for the nation’s current economic woes. The latest target in this series of straw men is government regulation, which the Heritage Foundation yesterday labeled the number one impediment to job growth.
Setting aside for the moment that it was a lack of regulation that allowed the derivatives market to wreck the economy, this claim fails to take into account the real reasons business leaders themselves have given for laying off their employees. According to the Bureau of Labor Statistics, which conducts a yearly Mass Layoff Statistics program that requires businesses to report their reasons for firing employees, government regulation can account for only 0.2% of layoffs in 2009. A lack of business demand, on the other hand, accounted for nearly half of the 2.1 million people who lost their jobs that year.
The reason the average unemployment rate doubled between 2007 and 2009, rising from 4.6 percent to 9.3 percent, had nothing to do with new government regulation and everything to do with the deepening financial crisis. As the above graph demonstrates, government regulations and union labor disputes (another frequent scapegoat invoked by the GOP) combined accounted for only 0.3% of layoffs in 2009. In the vast majority of cases, it was insufficient demand and low consumption—caused by the massive overhang of household debt—that forced businesses to shed employees.
Nevertheless, Republicans continue to claim that any and all government programs are ultimately “job killers.” The Heritage Foundation, among other conservative think tanks, frequently refers to a paper drafted for the Small Business Administration’s Office of Advocacy by Nicole and Mark Crain, which estimates that regulations cost the U.S. economy $1.75 trillion dollars annually. They continue to cite this figure despite a recent report, “Setting the Record Straight: The Crain and Crain Report on Regulatory Costs,” which argues that the Crain’s calculations are wildly unreliable, based largely on opinion polling and using only the upper range of estimates given by the Office of Management and Budget. In fact, according to the OMB, the total benefits of regulation in 2008—including money saved from reduced health costs and increased life spans—ranged from $153 billion to $806 billion. Those numbers are backed up by similar analysis by the EPA, which estimates, for example, that the Clean Air Act prevented 160,000 cases of premature mortality, 130,000 heart attacks, and 13 million lost work days in 2010.
Republicans' misguided focus on eliminating such regulations, which keep our air safe to breath and water clean to drink, will not convince businesses to begin hiring again. Only by investing in our economy and infrastructure and assisting homeowners with their unprecedented household debt will we be able to increase consumer spending and get unemployed Americans back to work.