SPIN METER: Industry jobs studies are imprecise

By Larry Margasak

Associated Press

Published: Monday, Feb. 28 2011 12:00 a.m. MST

In this Aug. 31, 2010 photo, environmentalist Deb Thomas stands next to the Crosby 25-3 gas well, which blew out in 2006 when it was being drilled in the Line Creek Valley, about 40 miles east of Yellowstone National Park. The blowout released potentially explosive gas and authorities evacuated homes in the valley for three days. Local residents remain concerned about a plume of groundwater pollution they fear could spread to their water wells.

Mead Gruver, Associated Press

Enlarge photo»

WASHINGTON — Industry officials say with confidence that 7.3 million jobs will disappear if the Obama administration goes through with tighter rules to reduce smog. The industry-sponsored researcher who came up with that number isn't so sure.

"There's uncertainty around that," economist Don Norman said of the "shockingly high" job loss number he extrapolated using a study sponsored by the oil and natural gas industry's American Petroleum Institute and covering just 11 states.

"Even if the numbers are half of that, the number is huge," he said.

Norman, like most economists on any side of any issue, is quick to acknowledge that economic models used for calculating estimates of job losses and other effects from a particular policy depend on the assumptions fed into them, and that the reality can be far different.

Yet in testimony before House committees now run by anti-regulation Republicans, industry witnesses repeat numbers from imprecise economic models. Members of Congress often cite the same figures without the researchers' caveats.

"Some models are garbage in, garbage out. If you put in junk . you get junk coming out in the end," said John Irons, a researcher for the self-described left-of-center Economic Policy Institute.

Republicans have made a political issue out of what they refer to as job-killing regulations in a bad economy. Industry studies portray dire job losses from a wide range of proposed regulations, from rules that would govern the Internet to restrictions on student loan terms for students at for-profit colleges.

The potency of that argument hasn't been lost on President Barack Obama, who ordered a review of regulations that already has produced some rollbacks. The House, in legislation passed this month to finance the government through September, voted to shield greenhouse-gas polluters, coal companies and telephone and cable providers as well as the for-profit colleges from regulators.

In at least one case, the government itself got into the act. The Interior Department's experts estimated their proposal for protecting streams from coal mining would trim coal production and cost the jobs of some 7,000 of the nation's 80,600 coal mine workers.

Researchers defend their craft by insisting they make intelligent assumptions based on knowledge of the industry they study. But unlike the certainty expressed in congressional testimony, they know their limits.

"If anybody who does economic work tells you they know everything, they're full of crap," said John Dunham, whose research company conducted a study for the meat industry. He concluded that an Agriculture Department marketing proposal could cost the industry 104,000 jobs.

Norman came up with the potential loss of 7.3 million jobs by assuming the worst-case scenario for industry: The Environmental Protection Agency adopts the strictest possible limits on smog-inducing ground ozone and some plants close rather than install expensive pollution-control equipment.

The EPA, however, proposed a range of ozone levels it may adopt. It's not known how far the agency will go in its final rule.

Norman's study for Manufacturers' Alliance/MAPI accepted the compliance cost estimates from the oil and gas industry's 11-state study to estimate that industry costs would soar to $1.013 trillion annually between 2020 and 2030 under the toughest possible smog limits. The early study concluded that in 2020, the 11-state costs of complying with the strictest possible standards for ozone would be $187.1 billion, with job losses of 1.45 million.

There were other major differences between the two studies:

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