Saturday, February 4, 2012

Deceitful Job Claims

In a recent guest column that appeared in the Missoulian and the Billings Gazette, PPL Montana spokesman Gordon Criswell claimed that his company’s coal fired power plants in Colstrip have a very small negative impact on Montana’s environment and a very big positive impact on its economy.  To some of us, these claims sounded pretty outlandish. Writing in response to Criswell, Wade Hill, a Bozeman nurse, described the severe threat to public health posed by the Colstrip plants, and UM economist (and my former colleague) Tom Power and I questioned both the size and significance of the economic impacts that Criswell described. (Here are links to the three pieces: Criswell, Hill, and Barrett and Power).

Reading all the competing numbers and claims in these columns, you might be tempted to conclude that all they amount to is a large and messy academic dispute of no real consequence. When Tom and I said in our column that Criswell had exaggerated the importance of the jobs supported by the Colstrip plants, a Missoulian reader sent us a long and thoughtful email arguing that we had missed the real point: in this economy, we should realize that every job is needed and important.  We certainly agree with that, but there’s more to it.

All sorts of interests (businesses, non-profits, trade associations, schools and universities, developers, etc.) regularly use economic impact analysis to bolster the claim that unless they receive some kind of preferential treatment from the public, many, many jobs will be lost. That’s something that of course nobody wants, especially right now, and the public and policy makers need to take a threat of job loss seriously. On the other hand, preferential treatment can come at very high cost, in the form of weak environmental regulation (that seems to be what PPL is after) or selective subsidies and tax cuts that compromise important programs and reduce public sector employment.

Policy makers need to be very, very careful when weighing claims of job loss against the cost of preferential treatment, because the sad fact is that the losses are almost always overstated. Claiming to be important and to create a lot more  jobs than you really do in order to wrest concessions from the public is, frankly, deceitful and does us all a profound disservice.


  1. Unfortunately, small fish, kit foxes, and some toads have made conservatives skittish when it comes to environmentalist claims that businesses are big, bad capitalists bent on killing us all for the profit motive. Although I am one conservative that believes that the environment has no market protection and must be taken into account in deciding to allow companies to dump anything into our rivers, I also have a difficult time with county commissioners who don't want large call centers in Missoula because they don't pay $10/hour for every job! I find it hard to believe that we cannot find a way to work in a bi-partisan manner to bring businesses into this sickly economy. If it is truly going to hurt, then no, we don't need it; but we should be conducting cost benefit analysis that makes sense, from the point of view of those who are living on the edge to those who live off of and in our environment. I hope you can do this with an open mind and heart.

  2. If cost benefit analysis means balancing environmental impacts against job creation, the only way it can "make sense" is for the job creation claims to be accurate and not overstated. That is the point of my post. Beyond that, it is important to recognize that complying with environmental regulations and reducing environmental impacts often requires firms to create jobs. The environmental cost of whatever we're talking about(electricity generation, say)is reduced and labor costs rise. The net result is often a reduction in the true economic cost of electricity. See my January 10 post for more on this topic.