Will the Fuel Efficiency Rollback Help Employment?
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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