January 29, 2021 - Podcast

Episode 84—The economy, and the EPA

The coronavirus pandemic has killed more than 416,000 Americans and recently pulled the U.S. economic recovery into reverse. With some states shutting down again to get a handle on surging caseloads, critics are blaming states’ governors for job losses. But IU economists say it is not shutdowns that are killing jobs, it’s the virus. IU economists Sumedha Gupta, Kosali Simon and Coady Wing reviewed more than 60 pandemic and social-distancing studies and found four emerging facts from the spring shutdowns. First, if stay-at-home orders poisoned an otherwise healthy economy, business should have crumpled the moment they kicked in. But researchers say cellphone activity data show people started to stay home well before states imposed shutdowns. Simon says in the chaotic early days of the pandemic, most people didn’t wait for official stay-at-home orders. In fact, the economists say, most of the economic damage we’ve seen is produced by people’s reaction to the virus. Social distancing policies mattered, but they were layered on top of a major change in personal behavior. Second, research shows the virus itself caused an enormous drop in activity, while shutdowns caused a small additional decline. In other words, if pandemic fear leads both to people staying home and to policymakers imposing lockdowns, then fear is the true driving force. Economic declines and lockdowns happen to be correlated, the economists say, because they’re pushed by the same thing. The IU economists also found that when shutdowns lifted, activity didn’t quickly spring back. Economic activity returned only about 5 percent faster in places that lifted their shutdowns compared with those areas remaining shut down. Finally, although some critics are blaming job losses on Democratic governors, analysis shows job losses don’t depend solely on the governor’s party. While red states, on average, have recovered slightly faster than blue states, some red states struggled while some blue states thrived. Gupta notes that people are oversimplifying when they equate “Democrat” and “shutdown” and points out that a large majority of Republican-led states also shut down. IU economists say as the first wave of shutdown research would predict, there’s little difference in employment between red and blue states despite some variation in policy. Regardless of politics, they say American states all had one enormous thing in common in 2020: the coronavirus.

In other news, in the first few days in office, President Joe Biden started signing executive orders to reverse Trump administration policies. One sweeping directive calls for stronger action to protect public health and the environment and hold polluters accountable, including those who disproportionately harm communities of color and low-income communities. David Konisky, professor of public and environmental affairs at IU, says with the nomination of Michael Regan to head the U.S. Environmental Protection Agency, who would be the first Black man to serve as EPA administrator, there is an expectation that the agency will make environmental justice a top priority. The EPA created an Office of Environmental Justice in 1992, but Konisky says it has never given the issue sustained attention. In fact, despite activism from a growing environmental justice movement, widespread evidence that pollution overburdens poor and minority communities, and a Clinton-era executive order that mandated federal action, Konisky says the EPA has largely failed to modify its programs, policies and decision-making process. According to Konisky, the agency’s toolkit for taking on environmental injustice is limited. Current environmental laws do not require it to craft policies to address unequal pollution burdens, and in some cases, they make it difficult to do so. Konisky says EPA officials can advance environmental justice immediately by striving for inclusive decision-making. This means not just listening to people of color and other communities suffering from pollution burdens, but empowering them to be involved in decisions that affect their lives. Additionally, Konisky says EPA leaders should prioritize enforcement activities in overburdened communities. Numerous studies have shown that federal and state agencies conduct fewer inspections and impose lighter penalties when offending pollution sources are located in low-income neighborhoods and communities of color. Another action would be to make better use of the Civil Rights Act of 1964, which prohibits organizations that receive federal funds from discriminating against protected groups. Konisky says this includes state and local agencies that issue permits and carry out other activities to implement federal pollution control laws. Konisky says the EPA has an abysmal record of applying the act and historically it has not been willing to make findings of discrimination, or in many cases even to conduct serious investigations of credible allegations. Finally, Konisky says the EPA can make it routine practice to consider environmental justice in its rule-making. Fortunately, the EPA already has guidance that was published in 2016 showing how to do environmental justice analysis. Through more careful attention to how new rules affect low-income communities and communities of color, the agency can make its decisions more transparent and adopt policies with fewer impacts on already overburdened communities, he says. Eventually Congress will need to provide the EPA with new tools but until that time, the agency can more effectively use its current authority to get started. Achieving environmental justice is a long-term project, and the EPA is just one of many government agencies that need to change their ways before the U.S. can make progress.