It’s no secret the Waxman-Markey cap and trade legislation to reduce carbon dioxide emissions is a jobs killer. Heritage Foundation economists found that over a 2012-2030 timeline, job losses average over 1.1 million. By 2035, a projected 2.5 million jobs are lost below the baseline (without a cap and trade bill). But don’t take our word for it. The Black Chamber of Commerce and The Brookings Institution are projecting catastrophic job losses as well.
It’s all right, though, because the government has you covered. Sort of. It’s called Climate Change Worker Adjustment Assistance (CCWAA). Translation: It’s unemployment insurance for those who are going to lose their jobs because of Waxman-Markey. It provides “156 weeks of income supplement, 80 percent of their monthly health care premium, up to $1,500 for job search assistance, up to $1,500 for moving assistance, and additional employment services for skills assessment, job counseling, training, and other services.”
The problem is, the numbers don’t add up. A recently released CBO report calculates the outlays for the CCWAA to be $4.3 billion over 9 years (2011 through 2019). Using $35,507 as the average income per person and $9,968 as the average health care cost, the annual compensation cost to a worker displaced by Waxman-Markey would be $32,829. Combining those two estimates, CBO suggests that the program would cover, on average, 14,553 displaced workers each year.
The Heritage Foundation estimates that between 2011 and 2019, an average of 987,440 Americans will be out of work because of Waxman-Markey. Using CBO’s guidelines, only one out of every 68 displaced workers would receive benefits. That’s 1.47 percent of displaced workers.
The legislation caps the benefits based on auction-allowance revenue formula – that limit cannot be exceeded. According to the legislation, “The Secretary shall promulgate rules to ensure that this spending limit is not exceeded. Such rules shall provide that workers who receive any of the benefits described in section 426 receive full benefits, and shall include the establishment of a waiting list for workers in the event that the requests for assistance exceed the spending limit.”
Let’s suppose the assistance program goes into effect on October 1, 2011 and the average annual job losses occur equally throughout the year. If you lost your job on between October 1st and October 5th, you would be receiving benefits – otherwise, you would be placed on a waiting list.
With so many people affected by cap and trade and so few receiving assistance, calls to fully fund the program would commence (think No Child Left Behind). If the government covered every displaced worker, the total cost from 2011 to 2019 (CBO’s time window) would be $291 billion – more than $32.4 billion per year. From 2011 to 2035, Heritage estimates average annual unemployment to increase by 1.14 million people, which would cost an average of $37.7 billion per year. The 25-year cost would be $942.1 billion.
For the purposes of this analysis, we did not include other costs associated with the program. These include: administrative costs, assistance to enable individuals or groups to file for benefits, written notice to workers, published notices, worker training costs via voucher program, commuting expenses to training, one-time $1,500 job search allowance, up to $1,500 relocation assistance, on-the-job training, and other miscellaneous expenses. These would undoubtedly add to the government’s tab.
It’s worth noting the job losses come after accounting for the green jobs policymakers are adamant about creating. Surely industries will hire people to build new windmills and solar panels; of course, most of these jobs will come at the taxpayer’s expense, since the government subsidizes renewable energy projects. In any event, cap and trade is a disguised energy tax that will significantly drive up energy prices. The general rule of thumb in economics is you tax something if you want less of it. But the problem is, our economy runs on energy; in essence, cap and trade is also taxing the economy and reducing its growth potential. A slower economy translates to higher unemployment even after incorporating green job creation.
Americans displaced by global warming legislation may want to try their hand at the lottery; they may have better odds of making ends meet.
Dan Holler, The Heritage Foundation’s Senate Relations Deputy, crunched the numbers and co-authored this post.