Elizabeth Bewley, Gannett Washington Bureau
WASHINGTON -- Anyone who's listened to a Republican lawmaker or presidential candidate lately has heard this refrain: Excessive regulations kill jobs.
New or proposed EPA rules have drawn the most GOP scrutiny. Of the top 10 "job-destroying regulations" singled out by House Majority leader Eric Cantor last year, seven came from the EPA. The agency has been deemed a "job killer" by Tennessee Republicans and GOP presidential candidates alike.
"Just get government out of the way," Rep. Diane Black of Gallatin has said her constituents tell her, "and they'll create the jobs and grow on their own."
That sentiment came through in a recent survey by the Nashville Chamber of Commerce in which 43 percent of the group's members said government regulation was their business' leading problem.
But economists and many Tennessee business leaders say the big picture isn't that simple.
Lagging demand by consumers accounted for nearly half of mass layoffs in the third quarter of 2011, while government regulations accounted for less than 1 percent, according to the Labor Department's most recent figures.
And when the National Federation of Independent Business asks small-business owners to identify their single biggest problem, they name poor sales more often than government red tape.
"The sales just aren't back," said Jim Brown, NFIB's state director in Tennessee.
Many Tennessee companies echoed those conclusions, saying lack of customer demand -- not government regulation -- remains their No. 1 obstacle to hiring.
"It's simply a demand issue at this point for us," said Thomas Ryan, spokesman for Memphis-based International Paper. "When we have more demand in the marketplace, we'll begin to hire again."
The top executive at MIG, a Lexington-based auto-parts manufacturer with five operations across Tennessee, agreed.
"There really aren't any regulations or issues other than just having the need to increase production," Andre Gist, the company's CEO, said. "It's all based on demand more than anything,"
Complying with water and dust regulations costs him more than $1,000 each year, he said, but that expense "is no different from any other time. It's something we knew when we went into business."
Patrick Higgins, former president and current board member of the Tennessee Automotive Manufacturers Association, said regulations haven't kept automotive companies from hiring. The industry is beginning to see demand bounce back and plans to add new jobs this year.
"We always hope there's less regulations, but we're going to be hiring one way or the other," he said.
Other business owners disagree, arguing that costs have shot up in recent years and uncertainty about future regulations has multiplied.
The EPA finalized several major regulations last year, including rules aimed at curbing the amount of mercury and other pollutants that utilities emit and reducing smog that crosses into other states.
Republicans have called those and other proposed regulations, such as pollution standards for boilers and disposal requirements for coal ash, overly burdensome.
The Tennessee Chamber of Commerce and Industry and some large Tennessee companies, including International Paper and Kingsport-based Eastman Chemical Company, submitted public comments expressing concern with the cost of implementing the boiler rule.
"Our ability to invest in job-creating growth initiatives, particularly in the U.S. is limited when we have to plan on making significant capital outlays for regulatory projects," said Wanda Valentine, spokeswoman for Eastman.
Bobby Joslin, owner of the Nashville electric-sign manufacturer Joslin Signs, shares that sentiment.
"We've seen demand increase and we are getting ready to start hiring again," he said. "The regulatory environment is the gray area. Things come down the pipe from the EPA, and you try to get a read on what they want and you get three different answers to your question."
Joslin said he has spent $14,000 complying with an environmental rule requiring special disposal of fluorescent lamps, which contain mercury, and he plans to spend another $7,500 to certify his crane operators under an Occupational Safety and Health Administration rule.
If he weren't spending that money on regulatory compliance, he might use it to invest in new equipment and hire new employees to operate it, he said.
Phil Friedli, vice president and general manager of Metal Moulding Corporation in Madison, said that while consumer confidence remains his company's biggest obstacle to hiring, he is increasingly worried about proposed EPA air pollution rules.
The cost of upgrading equipment to reduce particles in the air would hurt his company's bottom line just as it is starting to hire again, he said.
"Granted, there are some reasons why you have regulations and things like that, but you've got to have common sense," Friedli said.
Bill Penny, who practices environmental law as a partner at Sites & Harbison in Nashville, said there's no question the number of federal environmental requirements -- official and unofficial -- has increased in the last few years.
But much of the outcry surrounding new and proposed rules "is more alarm than truth," he said, because many EPA rules have a minimal effect on companies' bottom lines.
Gary Burtless, an economist at the Brookings Institution, agreed.
While new regulations can hinder growth in the short term, he said, they can actually help in the long term.
He pointed to the 2008 financial crisis that catapulted the country into recession.
"In that case, greater regulation might have saved the economy," he said. "It might have produced slightly slower growth from 2003-2007, but much greater output in terms of higher employment today."
Environmental regulations may result in longer-term productivity by keeping people healthier, he said.
That's the argument the EPA has made with its recently finalized rules.
Agency officials estimate that reducing smog that travels to downwind states could avoid between 650 and 1,700 deaths from respiratory conditions in Tennessee.
"There are very few regulations that just have a pure negative effect on employment," Burtless said. "What the public gets is a very one-sided view of a lot of regulation."
You Might Be Interested In