How Regulation Kills Jobs

Speaking of job creation, here’s some more numbers to consider, courtesy Investor’s Business Daily:

Federal regulations cost the economy more than $1.75 trillion in 2008, about 14% of the size of the economy.

To understand how massive that is, consider that the regulatory burden for each U.S. household is more than $15,000 a year while private health care spending per household is $10,500 annually.

When calculated as a burden on business, federal regulation cost $8,086 per employee in 2008.

But that’s an average across all businesses. The cost to small businesses, those with fewer than 20 workers, is “$10,585 per employee, which is 36% higher than the regulatory cost facing large firms (defined as firms with 500 or more employees),” says a report from the Small Business Administration’s Office of Advocacy.

The higher cost to small businesses is significant. They are the real job creators in this country. The SBA says they employ about half of this country’s workers, and our own data show they create more than 80% of all new jobs.

Small businesses also create more than half of nonfarm gross domestic product, the SBA says. Encumbering them with government rules creates an enormous barrier to hiring and economic growth.

Of course, there’s more to government intervention than regulation. Add in the federal tax load — 21% of GDP three years ago — and an economic millstone, which “consumed 35% of national income” in 2008, the SBA says, is formed. That’s a big hit on all Americans and it has to be cut sharply for the economy to recover strongly.

Simply put, dollars that go into government red tape doesn’t go to payroll for new employees.


Tags: ,

About Conservative Wanderer

Conservative Wanderer is currently Editor-in-Chief of That's Freedom You Hear! That means anything that goes wrong can be blamed on him. Previously he was a contributor to the PJ Tatler.
%d bloggers like this: