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March 1, 2004
TWO YEARS AGO, EPA released its first Recycling Economic Impact study. According to EPA's analysis, recycling companies employed more than 1 million people, paid them more than $37 billion per year and had annual revenues equal to the auto and truck manufacturing industries. Pretty impressive!
Unfortunately, the numbers were the result of a flawed methodology, which greatly expanded the recycling industry beyond mere collectors and processors to include manufacturers that used recyclables as part of their raw material recipe.
EPA received a fair amount of flak over its methodology. Recently, the agency circulated a paper assessing the original methodology “with particular attention to criticism raised by industry experts Jerry Powell and Chaz Miller.” I admit, I was flattered at being called an industry expert, but receiving second billing cut me down a notch.
EPA raised a number of questions about the “input-output” modeling tool used in the REI. I'll let the modeling experts fight that one out. I know I'm not an expert on economic impact models and which multiplier techniques most appropriately determine employment and income impacts associated with any type of economic activity.
I suspect, however, that if you took a representative economic impact analysis for every industry in America and added up their claimed direct job impacts, then every man, woman and child has at least two full-time jobs. And if you add up their claimed indirect job impacts, we all have four or five jobs.
The agency's paper also addressed an issue I raised in an earlier column. I had questioned the way the study counted workers in manufacturing industries that use recycled content. The REI defined workers in an industry that is “dependent” on recyclables to be part of the recycling industry. This meant a steel worker at a plant using 70 percent virgin ores and 30 percent scrap was considered a recycler as much as someone who spent all day collecting or processing recyclables or working at a paper mill that uses 100 percent recycled fiber to make new products.
Yet, it would be equally logical to conclude that because the furnace also is dependent on virgin ores, the steel worker is also a miner. This means that he is employed by three industries: steel, recycling and mining. And using the logic of industry-specific economic impacts analyses, has three jobs. But I bet he only gets one paycheck — and it's from the steel industry.
Economic impact studies offer valuable insights into the relative importance of an industry. But the best studies don't overstate their case. EPA should limit its direct job count for the recycling industry to workers who collect and process recyclables. The numbers won't be as large as in the previous study, but they still will be impressive.
The agency then should do a separate analysis of the dependence of American industry on recyclables as a raw material in the manufacturing process. Recyclables permeate manufacturing. EPA can celebrate this fact and highlight our extensive use of recyclables and still give an impressive accounting of the size of the recycling industry.
The columnist is state programs director for the Environmental Industry Associations, Washington, D.C.
Opinions in this column do not necessarily reflect the National Solid Wastes Management Association or the Environmental Industry Associations. E-mail the author at: [email protected]
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