Facts

FACTS ON THE IMPACT OF REGULATIONS ON SMALL BUSINESS

U.S. small businesses employed 56.8 million people, or 48.0% of the private workforce, in 2013.[1] 85 percent of small business owners are not hiring, and almost half of them point to government regulations as the primary reason.[2]

[1] “Statistics of U.S. Businesses: Latest SUSB Annual Data by Establishment Industry,” United States Census Bureau, 2016.
[2] Dennis Jacobe, "Health Costs, Gov't Regulations Curb Small Business Hiring," Gallup, February 2012.

An estimated 600,000 small businesses and the 6 million jobs associated with these small businesses were lost from 2008-2012, and regulations are partly to blame.[3]

[3] "The Two-Speed Economy," Goldman Sachs Global Markets Institute, April 2015.

Federal regulations cost businesses just under $10,000 per employee annually, with the annual total cost burden on the typical U.S. business coming in at a whopping $233,182.[4]

[4] W. Mark Crain and Nicole V. Crain, "The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business," National Association of Manufacturers, September 2014.

The cost to hire full time employees and ensure they are in compliance with government regulations is 10 times higher for small businesses than large ones.[5]

[5] W. Mark Crain and Nicole V. Crain, "The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business," National Association of Manufacturers, September 2014.

Regulatory costs amount to an average of $14,976 per household—around 29 percent of an average family budget of $51,100.[6]

[6] Clyde Wayne Crews, "Ten Thousand Commandments 2015," Competitive Enterprise Institute, May 2015.

The scope and complexity of many regulations are stifling American businesses to the tune of $2 trillion annually, a figure that would make up more than half of the entire federal budget. [7] This has resulted in the U.S. productivity growth rate dropping to nearly half its historical rate. [8]

[7] W. Mark Crain and Nicole V. Crain, "The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business," National Association of Manufacturers, September 2014.
[8] Edward C. Prescott and Lee E. Ohanian, "Behind the Productivity Plunge, Fewer Startups," The Wall Street Journal, June 2014.

Federal regulations have reduced economic growth by about 2 percent per year between 1949 and 2005.[9]

[9] John W. Dawson and John J. Seater, "Federal Regulation and Aggregate Economic Growth," Appalachian State University and North Carolina State University, January 2013.

If federal regulations were still at levels seen in the year 1949, current GDP would be $38.8 trillion higher.[10]

[10] John W. Dawson and John J. Seater, "Federal Regulation and Aggregate Economic Growth", Appalachian State University and North Carolina State University, January 2013.

If U.S. federal regulation was a country, it would be the world’s 10th largest economy, ranking behind Russia and ahead of India.[11]

[11] Clyde Wayne Crews, "Ten Thousand Commandments 2015," Competitive Enterprise Institute, May 2015.

For every 10 percent increase in regulatory costs in an industry, the number of small and medium-size businesses in that industry falls 3 to 6 percent.[12] Largely because of these costs, the annual rate of new business start-ups is about 28 percent lower today than it was in the 1980s.[13]

[12] Ben Gitis and Sam Batkins, "Regulatory Impact on Small Business Establishments," American Action Forum, April 2015.
[13] Edward C. Prescott and Lee E. Ohanian, "Behind the Productivity Plunge, Fewer Startups," The Wall Street Journal, June 2014.

The Government Accountability Office found that about 35 percent of major regulations are issued without a public comment period.[14]

[14] "Federal Rulemaking: Agencies Could Take Additional Steps to Respond to Public Comments," United States Government Accountability Office, December 2012.

Among the 183 countries reviewed by the World Bank & International Finance Corporation, only seven implemented no changes to reduce the complexity and cost of regulatory processes in the past five years—Antigua and Barbuda, Bolivia, Eritrea, Iraq, Kiribati, the Federated States of Micronesia and the United States. Except for the United States, these are economies that typically rank low on the ease of doing business.[15]

[15] "Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises," The World Bank, 2013.

Since 2008, regulation has surpassed insurance and big business as the single most important problem facing small businesses, with nearly 25 percent of small businesses citing it as their most important problem.[16]

[16] "Small Business Economic Trends," NFIB Research Foundation, May 2015.

90 percent of small business owners support regulatory process reform.[17]

[17] Glen Bolger and Bill McInturff, "Summary of 800 Small Business Owners, Manufacturers, and Owners of C-Level Decision Makers," Public Opinion Strategies, September 2012.