Employment Gains Expected if Prop 23 Passes

Employment Gains Expected if Prop 23 Passes

The California electorate next month will vote on Proposition 23, which would suspend the implementation of the state’s global warming (i.e., energy taxation) law (“AB32″) until the unemployment rate reaches 5.5 percent for four consecutive quarters. My new paper on the employment effects of this initiative can be found here [1].

In a nutshell: Based upon official estimates of the reduction in state energy use attendant upon implementation of AB32, Proposition 23 would increase California employment by over half a million in 2012, and over 1.3 million in 2020. (Total employment in 2009 was about 16.2 million.)

This is based upon an econometric analysis of the relationship between California employment and energy use for the period 1976 through 2007. That employment gain is no trivial benefit from suspending a law the original justification for which was—I am not kidding—“California has to be a leader,” a rationale utterly shallow even by the standards of political sloganeering.

The California unemployment rate stands at 12.4 percent; it will be interesting to see if the voters in this deep-blue state will choose to turn away from a regulatory juggernaut promising massive costs and, literally, no benefits.

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