By on August 7, 2018

fairfax line assembly factory general motors, Image: General Motors

President Donald Trump was obsessed with U.S. employment long before being sworn in as Commander-in-chief. In fact, the jobs rhetoric played a major role in swaying traditionally democratic voters in states like Michigan. The promise of manufacturing positions, the kind of work American used to be known for, was too tempting for some living in the Rust Belt to ignore.

“We’re going to work on the CAFE standards so you can make cars in America again,” he told Detroit’s auto workers in March 2017, referencing the Corporate Average Fuel Economy. “We’re going to help the companies, and they’re going to help you.”

Those fuel economy rollbacks are now fast approaching, after the National Highway Traffic Safety Administration and Environmental Protection Agency released their official proposal last week. But will it truly help bolster employment rates in the United States? The answer depends largely upon who you ask.

According to Bloomberg, a contingent of experts exist who feel that easing the preexisting CAFE standards will actually prove counterproductive. The blanketed and abridged version as to why revolves around neglecting new technologies and a lack of innovation — two elements that typically create jobs. Our take is, as usual, far more nuanced. But let’s take a look at the experts’ claims to see what information can be gleaned.

The proposal issued by the NHTSA and EPA states that freezing fleet-wide fuel efficiency requirements after 2020 would ultimately require fewer man-hours than the existing standards. While it still predicts that the automotive industry’s labor needs would continue to rise through 2030, the rate of growth was slower under Trump’s plan. By 2030, the CAFE rollback is estimated to require 5 percent less labor vs Obama’s plan — assuming everything else is equal.

However, it also estimates vehicle prices would stay reasonably flat through that time period, whereas the current emissions standards would elevate MSRP to offset technology costs. That, in conjunction with more vehicles people actually wants to buy, is supposed to yield higher annual sales. Theoretically, that would bolster employment or at least help to minimize layoffs. But it doesn’t address the issue of positions wholly dependent upon new technology, which results in a net loss in terms of total man hours.

Then again, those lost hours could take place overseas, sales could be higher than anticipated, and efficiency funding could end up going toward other advanced technologies which would still create jobs. However, none of that is an assurance.

“Unfortunately stepping away from strong standards cuts billions of dollars in investments in new technologies and the jobs that go with it,” said Zoe Lipman, advanced transportation director from BlueGreen Alliance.

Lipman’s group represents a partnership between labor unions and environmental advocates and claims the automotive industry has invested $63.8 billion in U.S. facilities, while promising another $12.4 billion through 2020. BlueGreen frames a large portion of that investment as intended to meet the Obama-era environmental mandates. It also says at least 1,200 U.S. factories and engineering facilities in 48 states with 288,000 American workers are building parts and materials that boost fuel efficiency.

Those figures are slightly misleading, as the investment and employment numbers aren’t exclusive to advanced fuel-saving technologies. However, taking a step back from established CAFE standards could negate future investments and the numbers show how far-reaching that could be.

It’s an issue that Susan Helper, a former chief economist of the Commerce Department during the Obama administration, feels strongly about. She claims that cheaper cars will simply translate to lost savings at the pump. But the real danger is allowing the rest of the world to surpass us technologically by allowing high-value engineering work to move to China and Europe — both of which will maintain tougher emissions standards.

“That’s really dangerous in terms of future competitiveness and making America great again,” said Helper.

[Image: General Motors]

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45 Comments on “Will the Fuel Efficiency Rollback Help Employment?...”


  • avatar
    Sub-600

    Why do they call her Susan Helper? Nothing she says ever “helps”. She used to champion Barack Hussein Obama’s “shovel ready” green jobs. They were shoveling something all right. “Companies like Solyndra will power our economy and our future”.

  • avatar
    VW4motion

    Making fuel efficient autos didn’t create jobs ?

    • 0 avatar
      MrIcky

      Subjectively- Some, but not as many as fuel inefficient autos create. With a few notable exceptions, the more fuel efficient vehicles don’t make enough money and have to be made in low wage countries. Whereas trucks and big SUVs have high margins and their plants moving from other countries (Mexico) to the US. At least that’s how it appears to me.

      • 0 avatar
        JimZ

        “Subjectively- Some, but not as many as fuel inefficient autos create. With a few notable exceptions, the more fuel efficient vehicles don’t make enough money and have to be made in low wage countries.”

        he says, pretending nothing has been done to improve the fuel economy of trucks and SUVs.

        • 0 avatar
          MrIcky

          Somehow I didnt take the comment I was replying to as a comment addressing fuel economy improvements in trucks.

          If you’re saying I’m wrong, I’d like to hear your points. Chevy, Ford, and Dodge all make their highest economy vehicles in other countries.

      • 0 avatar
        fIEtser

        @MrIcky

        I do believe Teslas are far more efficient than anything from GM or Toyota, yet the former company has far more workers in Fremont turning out far fewer vehicles than when the plant was NUMMI. In other words, far more jobs per vehicle. And Tesla is eating up competitors in its segments with promises to come for others.

  • avatar
    don1967

    This administration’s aversion to government-imposed stop-start turbocharged GDI engines with CVT transmissions is encouraging.

  • avatar
    VW4motion

    +1

  • avatar
    87 Morgan

    I am struggling to find the link between lower or fixed CAFE standards and an increase in jobs.

    All things being equal, you could make the assessment that continued research and development would slow as the need for further increases in efficiency is decreased. Seems like some R and D folks might hit the streets, or be reallocated who knows.

    Since this president has proven that mandates from previous administrations are not set in stone I think it is safe to predict that the same will happen to some of DTs mandates. So we may be back to some form of CAFE increase in the future anyway. I can see how the automakers would find the inconsistency frustrating.

    • 0 avatar
      Lou_BC

      “I am struggling to find the link between lower or fixed CAFE standards and an increase in jobs.”

      More fuel consumption means more jobs in the oil and gas sector.

      More fuel consumption means more pollution which translates to more jobs in the health care industry.

  • avatar
    TW5

    Bloomberg is making their stereotypical appeal to various cultural and political schema without providing any substance. Muh technology and high paying jerbs. They know the tech center jobs will be built on the backs of line workers who will be furloughed, offshored, or fired as production costs rise and SAAR declines. They also know we don’t have a problem with upper-middle class job creation or upper-middle class compensation growth.

    Bloomberg is merely stating the position of America’s gilded traitor class who suppose that the US trade deficit should continue to widen sharply so Wall Street has more capital and better earnings numbers to fuel their funds under management. Obviously, these people don’t care about the high tech jobs in oil exploration and production because those jobs can’t be offshored to a foreign country for a corresponding increase in the capital account.

    I suppose we should be happy these people are finally exposing themselves for the world to see, but it’s sad how many Americans continue to follow the pied piper’s down the road to perdition, especially since so many of them were championing worker’s rights a few election cycles ago.

    Repealing CAFE is good for the industry and for American workers. Technological development isn’t going to cease in the US, especially not if the economy continues to strengthen. Americans will keep demanding features and technologies, like they always have.

    Europe had higher fuel taxes and fuel economy standards than the US for decades. They rode public transit and drove smoke belching diesel penalty boxes. Their consumers do not have the discretionary income or the desire to pay for advanced powertrains. That’s why the US bought hybrids in large quantities long before the EU, though our taxes and fuel costs were miniscule. People buy what they can afford. We need strong consumers, not idiotic regulations.

    • 0 avatar
      gtem

      “Bloomberg is merely stating the position of America’s gilded traitor class”

      That sums it up rather succinctly.

      Whenever those people are in conniptions (tariffs, reducing low skill immigration to boost wages), it means we’re on the right track.

  • avatar
    TW5

    It won’t reduce technological investment. Demand for gasoline is fueling refining technologies, geology tech, and extraction tech, as well as funding capital investment in US infrastructure.

    Bloomberg rejects the validity of these jobs because US oil production, unlike US car production, cannot be offshored to the financial benefit of Wall Street.

  • avatar
    DeadWeight

    GO TEAM TRUMP!

    Bring back chimney sweeps, leaded gas, coal-burning power plants, Lake Erie fires, lead paint, and de-regulate whatever restrictions/caps their on pollutants in the air, water and ground, while they are at it.

    #MAKE AMERICA’S WATER, AIR & GROUND CARCINOGENIC AND TOXIC AT A 1970’S OR MYANMAR LEVEL AGAIN

  • avatar
    St.George

    Would R&D halt because standards will be eased in over a longer time period? Industries that don’t have tight government control still spend on R&D, it’s done to introduce a competitive advantage. I don’t see that stopping to be honest.

    Another question would be were the standards/targets introduced by the Obama administration in line with other countries and realistic/achievable? While setting lofty goals is admirable, if it can’t realistically be achieved, then it’s counter-productive.

    • 0 avatar
      TW5

      CAFE 2025 is somewhat in line with other countries, though they regulate by mass and we regulate by footprint. US fuel economy mandates are achievable, but the car market as we know it today would be dead.

      Legal car options would be 1) mild hybrid compact car 2) hybrid midsize sedan 3) hybrid midsize CUV 4) fullsize pickup truck 5) EV of whatever type

      Family sedans dead. Subcompacts dead. Offroaders dead. Sports cars and muscle cars dead. Compact CUVs dead. Fullsize CUVs and SUVs dead. Midsize trucks dead. Minivans dead. Light duty commercial vans dead.

      CAFE 2025 was overreaching when it was proposed. It has only grown more absurd as the oil markets have adjusted, and people have learned the actual cost and difficulty of implementation.

      • 0 avatar
        St.George

        Thanks TW, I always had a suspicion that these onerous standards were put in place as some sort of hand grenade (pin removed, ready to explode!) designed to cause problems for the incoming administration. Furthermore, there are always multitudes of ‘experts’ that get wheeled out to make these predictions (i.e net job losses due to lack of R&D into new clean tech), when they are proved wrong, there is no comeback, they just go back into obscurity.

        Great strides have been made with regard to vehicle emissions & economy with only the gentlest of prodding by government having been required.The main driver of technological improvements is a robust economy, consumers then will have the ability to choose the right vehicle for them and many will choose ‘green-ness’ as an important factor (think Tesla).

        Another poster above made a good comment about low-hanging fruit. It gets harder and harder to chase fractions of mpg’s. How about helping developing countries improve the cleanliness of their fleets?

      • 0 avatar
        Snooder

        I don’t understand how you can say that family sedans will be dead if the new landscape would include hybrid sedans.

        You can literally take every category of vehicle you proclaim to be dead, downsize the engine, add a battery and a motor, and BAM CAFE 2025 compliant.

  • avatar
    mikey

    I’m not informed, or equipped with enough knowledge to comment.

    I do know that the young lady in the photo operating an air powered tool , should be wearing safety glasses.

  • avatar
    sirwired

    I’ve always wondered at assertions that regulations on the environmental output of equipment somehow makes us unable to manufacture said equipment in the US.

    If all cars sold in the US need to meet law X, it applies equally to cars made overseas and imported here.

    That isn’t to say that there aren’t cost advantages to making cars in low-cost countries, but I’m not sure what any of that has to do with the fuel-efficiency rules for those cars.

    • 0 avatar
      deanst

      Because people are unwilling to pay for the technology on small cars, so costs have to be cut -I.e. moving to low wage countries. Higher margin vehicles have soon room to absorb the costs.

  • avatar
    stingray65

    Where do companies get the money to spend on R&D and expanded production (i.e. jobs)? The answer is: from profits.

    And where to US auto manufacturers make all their profits? The answer is: from big trucks, SUVs, CUVS, and powerful sporty cars.

    Where do US automakers lose money? The answer is: on fuel saving small cars, EVs, hybrids.

    What does higher CAFE require from automakers? The answer is: more production and sales of vehicles they lose money on.

    So how does higher CAFE lead to more US auto jobs? The answer is: it doesn’t.

  • avatar
    JimZ

    you and your ilk are pathetic.

  • avatar
    DenverMike

    The “experts” are wrong, thinking there would be a meaningful shift from what’s for sale today, or the gasoline engines that power them.

    There’s way too much profit and demand for bigger, thirsty vehicles, luxury, German or otherwise, commercial or government, vs relatively small, meaningless CAFE fines, especially on the worst actors, 20+ mpg off the mark.

    2025 CAFE targets were absurd overkill, and not just for lobby cash they were guaranteed, but the (weak $55 per mpg over the limit, per car/truck) “fines” were structured as a means to rake in additional billions annually from automakers, as opposed to wild, dramatic change in what we drive, how it’s powered, or how we get around.

    Why do you think the CARB is so p!ssed?

    • 0 avatar
      fIEtser

      The demand for luxury vehicles is being obliterated by Tesla and their roadmap includes something in the other segments that are cash cows of American automakers. Thus, they are going to HAVE to innovate and provide EV options in that space during the CAFE target time frame or they WILL be going the way of the dodo. Plus, there’s the uncertainty that would come from shifts in Washington over the next several years as well as the outcome from the court battle that could easily render the rollback meaningless. In either case, they will easily be able to meet the CAFE targets.

  • avatar
    John

    We are not a net imported of oil, infact we now export oil and natural gas, infact we are the worlds largest produces of LNG and the 2nd largest exporter, on our way to being 1st if the US gets contracts deom Japan and Korea.

  • avatar
    deanst

    The net impact will be increased investment in technology people will voluntarily pay for. As gas efficiency will not be decreased, America will remain essentially self sufficient in oil. The administration’s aversion to anti capitalist policies is wonderful.

  • avatar
    tomLU86

    I’m with Don1967.

    Stop-start has been instituted to help automakers boost their EPA scores.

    It is possible that they MAY slightly reduce fuel consumption. It is possible they may not.

    Stop-start adds mass (heavier electrical cables), which costs fuel. It also adds complexity, which adds COST at initial purchase.

    Some stop-start systems are seamless. Many are not. I’m thankful my car does not have it.

    Stop-start will NOT help the life of the starter. If it fails before he car is scrapped, the owner is confronted with an expensive repair.

    Stop-start WILL DEGRADE battery life. The customer will have to replace the battery sooner. The car will use more batteries over its life than it would have. In addition to cost, we have the heavy metals waste of additional batteries.

    So, the govt and automaker may feel good. But the reality is, very little has been done to help the planet. Possibly, stop-start is HARDER on the environment.

    However, we can BE SURE that the customer will pay for this frivolous idea–with money at the purchase and over the life of the car, and (possibly) with aggravation.

    IF, the govt truly cared about the planet, the easiest way to reduce fuel consumption and CO2 is simply to tax motor fuel. THIS is what our competitors do. This is honest–people will naturally be inclined to get smaller cars (they’ll ask, do I REALLY NEED a relatively thirsty Grand Cherokee, or can I live with a Cherokee? Do I need an Camry, or will a Corolla work?).

    If the govt would agree that motor tax money would be used ONLY for roads, until they were all fixed, I would enthusiastically support a gas tax.

    Instead, we have this duplicitous situation of CAFE, that encourages the delusion that we can have it all–Suburbans and 40 mpg and 0 CO2.

    We can’t.

    • 0 avatar
      Snooder

      Except that we CAN have 40mpg Suburbans with 0 CO2. It just has to be electric.

      Which in a day and age when the Tesla Model S has been in production for 6 years, and the Model X has been out for 3, it’s damn near criminal that no other American automaker has even hinted at an electric or hybrid SUV.

      The whole point of CAFE 2025 was to prod american automakers into producing electric vehicles by making sure that they couldn’t claim that they’d be losing money and market share to more frugal competitors. We shouldn’t NEED to, they should have enough foresight to make the switch on their own. The way literally every other automaker is, from VW to Mercedes, to Toyota, to Hyundai. But the Big 3, for whatever reason, have a history of ignoring obvious things and so we need to do it so we don’t end being behind, again, like we did with fuel efficient cars in the 70s.

  • avatar
    WildcatMatt

    The real argument here seems to be this:

    If manufacturers weren’t required to spend more on R&D to meet government targets, they would spend less on R&D. In turn, they would purchase fewer expensive new components.

    The expected trickle-down then is a) average vehicle prices would hold steady or even decrease, and/or b) manufacturers would be effectively able to trade two high-wage egghead-types for perhaps three low-wage (for the auto industry) blue-collar line workers.

    That’s a nice idea, but given recent history it should be coupled with incentives to repatriate jobs to go with the reduction in mandate. Otherwise the most likely outcome is the manufacturers keep prices on their current track, cut back R&D just enough to not fall behind everyone else, and use the money saved to buy back more stock.

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