We estimate the impact on air quality and employment of a major change in how the U.S. Environmental Protection Agency (EPA) designated air quality compliance under the Clean Air Act. In 1978, the EPA transitioned from a system based on Air Quality Control Regions (AQCR), or multi-county airsheds, to the county-level designations that are in place today. This fundamental change in regulatory structure has largely been overlooked by the academic literature. Its effects on air quality and manufacturing employment are examined using monitor data on Total Suspended Particulates (TSP), the County Business Patterns (CBP) employment panel and EPA’s official designation of nonattainment in 1972 and 1976, rather than the designation imputed in the literature. Counties in nonattainment in 1972, 1976 and 1978 according to EPA’s official designation experienced significant reductions in TSP levels and substantial job losses. Nonattainment status for TSP, CO, O3 and SO2 led to a collective job loss of approximately 515,000 workers in polluting industries between 1975 and 1988.