California's Prop 23: The Anti-Job Killer

If approved by the California electorate in two weeks, Proposition 23 would suspend the implementation of the California Global Warming Solutions Act of 2006 ("AB32") until the state unemployment rate declines to 5.5% or less for four consecutive quarters. AB32 mandates a reduction in California greenhouse gas emissions to 1990 levels by 2020, or about 25% to 30%. That goal can be achieved only by reducing aggregate energy consumption in the state, and to a small extent by substituting "green" power in place of fossil fuels. All government regulation creates economic effects, whether the regulations are beneficial on net or not. One central impact of AB32 will be on employment. If that impact is small, then the argument in favor of Proposition 23 would be weakened. If the employment effect is large, then the opposite would be true. A new statistical analysis published by the Pacific Research Institute casts considerable light on this question. In brief: Implementation of AB32 would reduce annual employment growth by 1 percentage point between 2010 and 2020, and the employment loss in 2020 would equal about 5% of the working-age population. By suspending the implementation of AB32, Proposition 23 would yield increases in aggregate California employment of a bit less than 150,000 in 2011, rising to over a half million in 2012, and about 1.3 million in 2020...more