We keep hearing that the economy is in a “jobless recovery.” What’s holding American companies back? Why aren’t they hiring more people?
High taxes draw a lot of attention, and rightly so. They depress investment and discourage innovation. But escalating regulatory costs also undermine our economy. And small businesses, which fuel so much economic growth and hire so many people, often wind up particularly hard hit by them.
You don’t have to be a doctrinaire conservative to realize this. The Economist, the London-based news weekly -- and a supporter of President Obama's candidacy in 2008 -- highlights the problem in its latest cover story, “Over-regulated America.” And they note the irony: "The home of laissez-faire is being suffocated by excessive and badly written regulation."
President Obama also has emphasized the problem. The “rules have gotten out of balance,” he said in a speech last year, resulting in “a chilling effect on growth and jobs.” When the National Federation of Independent Businesses asked small business owners in December to name their single biggest problem, 19 percent cited regulations and red tape -- up from 15 percent a year ago. That’s more than any other category except for “poor sales.”
The sheer number of regulations alone is staggering. Consider the size of the Federal Register, the daily official chronicle of regulatory changes. Before a new rule can take effect, it must be published in the Register. In 2009, it was 68,598 pages long. In 2010, it ballooned to 81,405. In 2011, the Register hit 82,415, a new record. And the president’s reassurances to the contrary, the number keeps going up.
Regulations add $10,585 in costs per employee, according to a study for the Small Business Administration. With a price tag like that, it’s no wonder hiring has taken a hit in the midst of a fragile recovery.
Beyond the number and the total cost are the regulations themselves. Many are ludicrously nitpicky and easy to lampoon. “There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis,” The Economist writes. The Heritage Foundation keeps a running tab of such rules on its “Tales of the Red Tape” weekly blog posts.
But while it’s entertaining to ridicule them -- and it’s certainly well-deserved -- we shouldn’t overlook the bigger rules. Take these three major new regulations from 2011:
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