AP Laughably Argues Regulations Aren't Job-Killers, Because Companies Almost Never Blame Them for Layoffs

October 12th, 2011 1:55 AM

Somebody needed to give Calvin Woodward and Christopher Rugaber at the Associated Press Five-Hour Energy drinks or some other boost before Tuesday night's GOP debate. Their brains must have totally turned off late in the  afternoon without re-engaging before they filed their late-evening post-debate report.

Behold how the AP pair "proved" that excessive government regulation doesn't kill jobs (bolds are mine throughout this post):

FACT CHECK: Regulations not a huge jobs killer

Is regulation strangling the American entrepreneur? Several Republican presidential candidates say so. The numbers don't.

The anti-regulatory fervor was in evidence Tuesday night in the latest GOP debate, but rhetorical flourishes, on that and other issues, masked far more complex realities.

... THE FACTS: Labor Department data show that only a tiny percentage of companies that experience large layoffs cite government regulation as the reason. Since Barack Obama took office, just two-tenths of 1 percent of layoffs have been due to government regulation, the data show.

Businesses frequently complain about regulation, but there is little evidence that it is any worse now than in the past or that it is costing significant numbers of jobs. Most economists believe there is a simpler explanation: Companies aren't hiring because there isn't enough consumer demand.

The conservative National Federation of Independent Business asks its small-business membership each month to name the single most important problem they're facing. Last month, the most common response was "poor sales," cited by 28 percent. Government regulation came in second, at 18 percent.

... High levels of economic uncertainty are another drag on business, but economists say that's less due to regulation than to fights over government spending and taxes.

Lord have mercy, guys:

  • I'm not going to concede that "large layoffs" don't occur because of government regs. Companies in financial trouble usually have a myriad of problems which the regulatory burden exacerbates. Paperwork and busywork are fixed costs which can't be avoided. If fixed costs associated with regulation are increasing -- and they are (and the linked item used figures from before Obamacare and Dodd-Frank came along) -- then declines in sales volume are more likely to lead to layoff decisions. When the decisions are made, the layoffs are likely to be larger and more likely to be permanent.
  • At a minimum, Woodward and Rugaber had no justification for  their "argument over" conclusion based only on looking at large layoffs. Small layoffs of 50 or fewer workers don't have to be reported to Uncle Sam, yet they may affect a larger number of people than those which are reported. Small-layoff events are more likely to occur at smaller enterprises, which have been shown to be more negatively impacted by burdensome regulations.
  • Far more fundamentally, laying a worker off is not the only way to "kill" a job. Not replacing someone who is fired, leaves, or retires (such as the possibly looming Obamacare) "kills" a job, and regulatory concerns are far from irrelevant in these decisions (finding, screening and training new people are quite heavily regulated processes). Using temps to avoid taking on a permanent burden and letting them go during even minor sales fluctuations "kills" reported full-time jobs. Deciding to make products offshore partially or completely because of regulatory requirements "kills" jobs which could have been created.

There happens to be a drop-dead obvious case of overzealous regulation killing jobs in the Gulf of Mexico which, after they wake up tomorrow have their morning coffee, even Woodward and Rugaber might recognize as valid. A report by Quest Offshore Resources, Inc. (HT Tina Korbe at Hot Air) provides evidence of post-oil spill job losses in the Gulf of Mexico:

While the offshore Gulf of Mexico oil and gas industry has seen some signs of recovery from the low state it was in during the drilling moratorium, activity levels are still well below the levels seen before the Macondo incident and well below the levels of the Quest baseline forecast before the incident. From a permitting, rig, and drilling activity perspective the industry is at best flat compared to where it was before the drilling moratorium, with the growth that had been previously expected both delayed and diminished.

... -As of the end of September, 21 floating rigs (those with subsea blow out preventers) are operating in the Gulf of Mexico, of which only 18 are currently drilling wells.
- Pre-moratorium 33 floating rigs were operating the Gulf of Mexico with 29 drilling wells at that time.
- This indicates a roughly 37 percent drop in both the number of rigs operating and drilling.
- Since the moratorium began, 11 rigs have left the Gulf of Mexico. Only one of these has returned, 3 rigs are currently sitting idle.
- 7 of these rigs have left to African countries including Egypt, Nigeria, Liberia, and The Republic of Congo. 3 of these rigs have left to South America, including Brazil and French Guiana. The remaining rig recently mobilized to Vietnam.
- This translates to approximately 60 wells lost based on the original contract terms of these rigs.
- The loss of these rigs amounts to lost spending of $6.3 billion and annual lost direct employment of 11,500 jobs over two years.

Memo to Woodward and Rugaber: The word "regulatory" appears once in Quest's report; so by your twisted definition, this "counts."

Rob Bluey at the Heritage Foundation explains what excessive regulation has done in this instance, not only to jobs but to U.S. Treasury collections:

A large part of the problem is the complexity of the new regulations and the lack of resources at the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) to handle these new complexities. The solution, however, is not more bureaucrats but a more efficient system that promotes safety, assigns full liability to oil and gas activities, protects the taxpayer, and allows offshore gas and oil exploration to continue. The system in place now is preventing people in the Gulf from getting back to work.

Not only is the anti-drilling agenda costing jobs and economic hardship in the Gulf region, but it’s preventing billions of dollars from coming into the federal government’s coffers because of decreased royalties, lease sales, and rent fees. Yesterday, Senator David Vitter (R–LA) wrote to Interior Secretary Ken Salazar and BOEMRE director Michael Bromwich urging the need for more action in the Gulf:

Another memo to Woodward and Rugaber: "Preventing people in the Gulf from getting back to work" = "killing jobs." I hope your Wednesday morning coffee is good -- and really, really strong.

Cross-posted at BizzyBlog.com.