The Biden administration’s historic regulatory output has led to a sharp increase in federal rulemaking in the past year—and the economic cost has been “much greater than previously reported,” according to a recent opinion piece in The Wall Street Journal (subscription).
What’s going on: “[I]t’s the overall impact of all new and existing rules that is economically excruciating, especially for small businesses,” writes “Best of the Web” columnist James Freeman, citing data from the October 2023 NAM-commissioned study, “The Cost of Federal Regulation to the U.S. Economy, Manufacturing
and Small Business.”
- “[As] economists Nicole Crain and Mark Crain recently reported in a study for the National Association of Manufacturers: ‘U.S. federal government regulations cost an estimated $3.079 trillion in 2022 (in 2023 dollars), an amount equal to 12% of U.S. GDP. These costs fall unevenly on the major sectors of the economy and on firms of different sizes; the findings indicate that compliance costs fall disproportionately on small businesses.’”
Why it’s important: “Small manufacturing firms incurred an average cost of $50,100 per employee—more than three times the cost incurred by small businesses economy-wide,” the study’s authors wrote.
- “Overall, small manufacturers incur regulatory costs that are more than three times the costs borne by the average U.S. company. Medium and large manufacturers in the United States face regulatory costs that are double the costs borne by the average U.S. firm.”
“Massive opportunity”: With regulatory compliance costs that seem to “exceed total individual income taxes,” Freeman writes, “there is a massive opportunity … to cut the cost of doing business, encourage investment and unleash growth without even having to enact a tax cut.”
What we’re doing: In addition to commissioning the study—which has been covered by CNBC, Yahoo Finance and Fox Business, among others—the NAM and members of its Council of Manufacturing Associations and the Conference of State Manufacturers Associations launched Manufacturers for Sensible Regulations, a coalition aimed at addressing the federal regulation onslaught.
- The coalition urged White House Chief of Staff Jeff Zients to appoint a senior-level adviser to coordinate administration-wide efforts that would ensure federal regulations do not hinder manufacturing growth in America.