on regulatory reform
I share the concerns raised in recent research done by the Mercatus Center on George Mason University’s Arlington, Va., campus. The findings should be required reading for lawmakers and federal agency managers as we set priorities for next year.
The study reported that manufacturers spent $28 billion on federal regulations in 2000 and estimated that the compliance costs amounted to a 1.6 percent “hidden tax” on products made in the United States. The authors of the report said that, while the expense of meeting federal workplace regulations initially falls on manufacturers, the American people pay the price in the form of increased costs for goods, fewer product choices, and wage reductions.
The George Mason study found that the regulatory compliance cost to manufacturers exceeded estimates in previous academic and government studies by 75 percent. The survey covered 25 federal laws and Presidential executive orders which represent workplace regulations including labor standards, employee benefits, health and safety issues, civil rights, and employment matters. It did not address environmental regulations, tax issues, and federal rules in other areas.
The report concluded that the average cost associated with regulatory requirements was $2.2 million per firm, or about $1,700 per employee. Small firms employing fewer than 100 workers have been hit the hardest with compliance expenses estimated to be nearly 70 percent higher than at larger facilities.
The monetary expenditures reported in this study are high, but it should be noted that the findings pertain only to the manufacturing sector. The cost of complying with all federal regulations throughout the U.S. economy is even more dramatic. The Small Business Administration has studied the issue and estimated the figure to be more than $840 billion in 2000.
No one is proposing the elimination of all regulations. The federal government has an important role to play in ensuring the health and safety of our workplaces, protecting the environment, and enforcing the law. Few people would take issue with the need for effective and fair regulations to meet these standards.
My concern, however, is that there are countless outdated and counterproductive regulations in place throughout the federal government.
Addressing this issue and the negative effect it has on the nation’s economy deserves attention on Capitol Hill this year.
This Congress has made great progress over the past six years in the area of regulatory reform. We have eliminated many duplicative programs and regulations and streamlined much of the federal paperwork burden. This latest report offers proof that much work still remains to be done.