Several weeks ago, I wrote that as of 2008, small businesses faced an annual regulatory cost of $10,585 per employee, according to an SBA regulatory impact study published two years ago.
The Office of the Chief Counsel for Advocacy of the U.S. Small Business Administration estimates that the annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008.
On the heels of this data, I came across a 2009 study from the California State University’s College of Business. This study measured and reported on the cost of regulation to small business in the State of California. The study found that the annual total cost of regulation to the State of California is $493 billion which is five times the state’s general fund budget, and almost a third of the state’s gross product.
How can a state or country be successful with this kind of anchor around its neck?
The cost of regulation results in an estimated employment loss of 3.8 million jobs in California alone which is one-tenth of the state’s population. Since small business constitutes the vast majority of all employers in California, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122 per small business in California in 2007.
I also noted in a previous column that EPA Assistant Administrator Mathy Stanislaus admitted to U.S. Rep. Cory Gardner that the EPA doesn’t account for jobs when they issue regulations.
Is it any wonder that a Wells Fargo/Gallup Small Business survey conducted in February found that 85 percent of small business owners say they aren’t hiring? Among these, the top reasons for not doing so include not needing additional employees and concerns about cash flows and the U.S. economy.
About half of this group listed potential healthcare costs and new government regulations as reasons for not hiring.
According to survey by Small Businesses for Sensible Regulations, three out of four Americans would prefer that the government focus on creating jobs instead of new rules and regulations. A survey by the Office of Information and Regulatory Affairs found that there are at least 4,128 federal regulations in the pipeline, and that there are currently over 400 federal regulations, which directly impact small businesses.
Does overregulation really matter to the average consumer?
Absolutely! The report noted that had every U.S. household paid an equal share of the federal regulatory burden, each would have owed $15,586 in 2008. By comparison, the federal regulatory burden exceeds by 50 percent private spending on healthcare, which equaled $10,500 per household in 2008.
If you want to experience first-hand how small business is being over regulated, you’ll find out when you need to get the refrigerant in your car’s air conditioning recharged.
The refrigerant has cost about $5 per pound wholesale for the past 15 years — before that, it was less than $1 per pound. But new Environmental Protection Agency regulations on ozone-depleting chemicals being developed could cause the price to soar to $85 per pound.
Guess what happens? The cost to recharge an auto’s air conditioning is passed on to the customer, who will pay $75 to $80, up from $60 to $65.
Under new proposed EPA regulations, it could cost $160 plus labor and other fees.
This is a case of diminishing returns. The cost of these regulations to our small business owners and consumers is staggering. However, their impact on the environment is minuscule with many scientists believing these regulations will have zero impact on making the ozone safer.
The latest proposed regulations of the Environmental Protection Agency (EPA) will force the closing of five American Electric Power (AEP) coal-fired power plants unless they are willing to spend at least $8 billion to renovate the plants to meet the newest guidelines. The result of this kind of EPA action is adding $300 per year to every American’s electric bill.
It’s times like this that I miss Ronald Reagan. He famously said: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
We probably won’t see the likes of Reagan again, but this nation would be far better off if we don’t see the likes of President Barack Obama again.
Put somebody in the White House that understands how business works and who will get regulation off the backs of small business so they can start hiring again.
JUN
