For Release — September 10, 2014
Pay Up: Federal Regulations Cost U.S. Economy
More Than $2 Trillion Annually
New NAM Study Shows Small Manufacturers in New York and Nationwide Face More Than Three Times the Burden of the Average U.S. Business
Albany, N.Y., September 10, 2014 – Complying with federal regulations costs Americans $2.028 trillion in lost economic growth annually, or roughly equivalent to 12 percent of total GDP that could be invested back into our nation's businesses, according to a new study commissioned by the National Association of Manufacturers (NAM).
The study, conducted by economists Nicole V. and W. Mark Crain, concluded that manufacturing businesses face a disproportionate share of the burden, or $19,564 per employee per year—nearly double what the average U.S. business pays to comply with federal rules. Small manufacturers pay more than three times as much as the average U.S. firm. That is $34,671 per employee per year that small manufacturers could use to grow their businesses and create jobs.
In New York, where the manufacturing sector contributes an estimated 5.2 percent to the economy and accounts for 455,100 jobs, onerous federal regulations are stifling growth and innovation.
“The average annual wage for a manufacturing job in New York state is more than $72,000,” said Heather C. Briccetti, Esq, president and CEO of The Business Council of New York State.
“This study demonstrates that every one of the more than 16,000 manufacturers in New York are burdened by complex regulations that hinder growth, holding back economic recovery across the state,” said Briccetti.
“Manufacturers have long cited more and more complex regulations as a barrier to their growth, and today, we have new data demonstrating the true burdens shouldered by manufacturers throughout the supply chain, particularly the smallest firms, in complying with growing federal mandates,” said NAM President and CEO Jay Timmons. “Manufacturers rely on a stable, balanced and commonsense regulatory environment to create jobs and fuel economic growth. With growing regulatory compliance burdens, policymakers should be alarmed that our nation's smallest manufacturers are being put at a competitive disadvantage within the global economy.”
The newly released NAM study builds on previous studies conducted by the Crains for the U.S. Small Business Administration's Office of Advocacy. This study updates previous estimates of the cost to comply with federal regulations using new data sources and incorporates the findings of an extensive survey of NAM members that validate conclusions reached in the economic analysis. That survey, for instance, shows that manufacturers would invest more in their businesses and in their people if compliance costs were lessened.
“Our data continue to show that small businesses and manufacturers bear a disproportionate share of compliance costs,” said Nicole V. Crain.
“Overall, we hope that this analysis helps policymakers as they contemplate additional regulatory proposals,” added W. Mark Crain. “Small business and manufacturers most frequently identified regulatory issues as the top business challenge.”
“These costs don't even include the more significant regulations heading our way, such as a new ozone standard from the Environmental Protection Agency that would be the most expensive regulation in U.S. history,” said Timmons. “These and other regulations mean an even larger burden on our country's small manufacturers. Now is the time to return clear-eyed economic analysis to the policy process and ease the burden on job creators across the country.”
For more information, including the full study and the executive summary, visit www.nam.org/CostofRegulation.
The Business Council of New York State, Inc.
The Business Council of New York State, Inc., is the leading business organization in the state. It represents the interests of public and private companies, colleges and universities, local and regional chambers of commerce and professional and trade associations across the state.
The primary function of the organization is to serve as an advocate for employers in the state political and policy-making arena, working for a healthier business climate, economic growth, and jobs.
The National Association of Manufacturers
The National Association of Manufacturers (NAM) is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12 million men and women, contributes $2.08 trillion to the U.S. economy annually, has the largest economic impact of any major sector and accounts for two-thirds of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the Manufacturers or to follow us on Shopfloor, Twitter and Facebook, please visit www.nam.org.
About Nicole V. and W. Mark Crain: The Crains are professors at Lafayette College and the authors of the 2010 study “The Impact of Regulatory Costs on Small Firms,” commissioned by the U.S. Small Business Administration's Office of Advocacy.