Stronger Regulatory Enforcement Will Spur Small Business Job Creation

Posted: Apr 06, 2011 11:02 AM

Small businesses are the cornerstone of the American economy. They employ over half of the country’s private sector workforce and create seven out of every ten new jobs. The answer to our country’s long-term unemployment problem lies in the growth of these small businesses. They are our job creators, and it is imperative that we create an economic climate that allows them to thrive.

Unfortunately, the growth of American small businesses has been hindered by excessive and unnecessary federal regulations. These regulations place costly and, oftentimes, unmanageable burdens on the backs of small business owners that inhibit many from hiring additional employees, and even forcing some to close. Studies have shown that small businesses must spend more per employee to comply with federal regulations than their large competitors. The Big Government practices of the Obama administration have only increased these regulatory burdens.

Overregulation is not a new phenomenon. In 1980, Congress passed the Regulatory Flexibility Act (RFA) legislation aimed at relieving the stress of onerous regulation on small businesses. The RFA mandates that all federal agencies examine the impact of their proposed rules on small businesses, and if those impacts are significant, the agency must consider less burdensome alternatives. However, it does not require they choose the least burdensome choice.

While its intent is good, the RFA in practice does not effectively protect the interests of small businesses from federal regulations. Many federal agencies simply ignore RFA requirements—and this should not be an option. We have the RFA for a reason and federal agencies should be following it and held accountable for their actions.

As Chairman of the House Committee on Small Business, I recently held a hearing to examine how we can strengthen the RFA and ensure that it is being enforced. We heard from witnesses who testified about the failure of the RFA to protect their interests. This cannot continue.

During the hearing, Bill Squires Sr., Vice President of Blackfoot Telecommunications Group in Montana said, “It is the view of our sector that the RFA is not doing what it was designed to do in terms of its application and interaction with regulations that emerge.” Later in the hearing he said, “Routinely all we are afforded is a couple of paragraphs tacked onto the end of a rulemaking that states that alternative regulation was considered, but rejected. …The [RFA] simply does not seem to compel anything more than a nod to the fact that it exists.”

When agencies impose burdensome rules and costly regulations on small businesses, it hinders job creation and will continue to slow our economic recovery. Unelected federal bureaucrats should not be in the position to execute overreaching directives without any examination of their actions.

We have a responsibility to protect America’s small businesses from the excessive federal regulations that crush jobs and put many out of business. Getting Americans back to work and our economy back on track is priority number one for my House Republican colleagues and me. Eliminating the loopholes in the RFA and ensuring it is strongly enforced is a logical first step in doing this.