Study confirms high cost of regulations

The common lament among business owners is that federal regulations cost trillions of dollars, money that could better be spent on expanding operations and creating jobs.

The common response that invariably follows from some quarters is that such claims are overblown. Surely the situation isn’t as bad as all that.

A new study estimates federal regulatory costs actually exceed those pegged in a previous study conducted for the government itself. As it turns out, the situation is not only that bad, but much worse.

According to a study commissioned by the National Association of Manufacturers (NAM), complying with federal regulations costs Americans $2.028 trillion annually in lost economic growth. That’s trillion with a T, by the way, and an amount roughly equivalent to 12 percent of gross domestic product in the country. For additional perspective, consider the federal budget is about $4 trillion.

The study breaks up regulatory compliance costs into four main categories: nearly $1.45 trillion in economic costs, $330 billion in environmental costs,

$159 billion in tax compliance and $92 billion for occupational safety and health and homeland security compliance.

The NAM study builds on previous studies conducted by the U.S. Small Business Administration Office of Advocacy that pegged federal regulatory costs at $1.75 trillion.

The NAM study also confirms another complaint — that small businesses shoulder a disproportionately heavy load in complying with federal regulations. The study found that manufacturing businesses in particular pay $19,564 per employee in compliance costs — double what the average U.S. business pays. And small manufacturing firms pay more than three times as much as the average business.

The NAM study is significant not only in confirming what small business owners long have decried, but in describing in dollars the affects of existing regulations, not to mention the potential costs of additional regulatory proposals.

All that ties into yet another often-heard lament: Why don’t businesses do more to expand their operations and create more jobs? Perhaps members of Congress and federal regulators might be better suited to field that one.