And the Regulations Go On and On

By ColumnsFOXBusiness

The Financial, Job Costs of Regulations

FBN’s Gerri Willis on how regulations hurt start-ups and small businesses that are the key to small-business growth.

Jobs. It's the one topic we can all agree on -- we need more of them. And, now Speaker of the House John Boehner in a speech on jobs talking about the need for a lower regulatory burden so entrepreneurs start more companies and hire more people.

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It's not just Republican talking points. For starters, 100% of net job growth in this country comes from start ups, according to the Kauffman Foundation. Take start-ups out of the picture and look at only large or medium-sized businesses and job growth over the last 35 years would be negative. In other words, startups aren't the only thing, they're everything. But government rules are making it ever more expensive and difficult to start those companies. In fact, small businesses bear a larger share of the financial burden of regulations compared to their bigger corporate cousins. According to a Small Business Administration study conducted by Lafayette College Professor Mark Crain, the cost of all federal regulations for companies with 500 or more employees $7,755 a year per employee. Woe be to you if you were a small business, the costs escalate to $10,585 per year per employee if you have fewer than 20 employees. That's a 364% difference. Environmental regulations? We've talked a lot about the new Environmental Protection Agency rules coming out. Well, again, according to Crain, big Fortune 500 companies pay just $883 to comply with EPA regulations, but small companies pay a whopping $4,100 per employee per year.

By the way, this analysis doesn't even include the newest EPA rules that are giving employers such a big headache and will cost hundreds of thousands of jobs. Tax compliance? $517 for big companies and $1,584 for little ones. Look, you get the picture -- if your company is small there's no environmental or tax department to outsource to. You end up paying big time for services off the shelf. By the way, the sector that gets hit hardest by far is manufacturing and services companies have the least regulatory burdens.

You should know that Crain, for his part, has conducted the study multiple times for the SBA and the 2010 results, while more pronounced in this study, were the same trendhigher regulatory burdens for small business. Another fact Crain told us is that the Obama administration seriously questioned his findings, saying he had overstated the impact. More PR spin from leaders who'd rather deal with the sizzle and not the steak. Finally, according to the National Federation of Independent Business, this trend is likely to get worse not better. Another 845 new rules are in the works that will hit small businesses. And, on and on and on. Congress writes new laws, regulators write new rules and then they write "guidance" letters that no business person feels they can afford to ignore. Old rules never sunset, they just go on and on.

Be sure to catch the Willis Report on the FOX Business Network every weekday from 5-6pm ET.

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