Greater Cheyenne Chamber of Commerce Business Journal Q2 2014 | Page 51
Business Journal
Issue Sponsor:
Capitol Properties
to help small business, cut
regulation
Orginally published on Entrepreneur.com
One of the best ways for Congress to help small businesses
would be to reduce their regulatory burden, which is
heavier now than when President Obama took office in
January 2009.
This increase in regulation is both
unfair and inefficient: Compliance
with governmental rules and laws
is a greater encumbrance on small
companies than large ones, and
regulation hinders small business
formation, growth, and job creation.
An increasing small-business regulatory burden also has
adverse economic effects. It reduces new business creation,
as research by World Bank economists has shown. Moreover,
additional rules lower small-company employment and
investment by raising the cost of
business activity. Furthermore, heavier
Between 2008 and 2013, regulation regulation makes domestic companies
went from being small business’s less competitive internationally, and
motivates businesses to transfer
fourth most important problem
operations to less heavily regulated
-- after sales, taxes and the cost/ venues overseas.
“
availability of insurance-to being its biggest difficulty.
The cost of federal regulations rose
by $70 billion during the President’s
first term in office, the Heritage Foundation reports. And
small business has not been exempted from the rising
tide. At the end of 2012, the number of federal regulations
affecting small companies was 13 percent higher than at
the end of 2008, Forbes reports.
Between 2008 and 2013, regulation went from being small
business’s fourth most important problem -- after sales,
taxes and the cost/availability of insurance -- to being its
biggest difficulty. In November 2008, only 8 percent of
small-business owners responding to a National Federation
of Independent Business survey said that “governmental
regulation and red tape” was the single most important
problem that small business faces. In November 2013,
however, 22 percent of respondents said that regulation
and red tape was their biggest issue.
The rising small-business regulatory burden is unfair.
Because regulatory compliance has a high fixed cost, small
businesses face a larger per-employee cost of adhering to
government regulations than big companies. In a report
for the Office of Advocacy of the U.S. Small Business
Administration, Nicole and Mark Crain of Lafayette
University explained that the per-employee cost of federal
regulatory compliance was $10,585 for businesses with 19
or fewer employees, but only $7,755 for companies with
500 or more.
”
In a 2011 op-ed in The Wall
Street Journal, President Obama
acknowledged this problem, saying
“sometimes, those rules have gotten out of balance, placing
unreasonable burdens on business--burdens that have stifled
innovation and have had a chilling effect on growth and jobs.”
He called for federal agencies to reduce the regulatory burden
on small companies. Unfortunately, the presidential request
has done little to address the problem.
Now, it’s time for Congress to act. The House and Senate Small
Business Committees should assign staffers to benchmark
what has been done to reduce the regulatory burden in other
countries, with the goal of copying the best initiatives enacted
elsewhere. The legislative branch should review the regulatory
consequences of the laws it passes prior to voting them in to
avoid discovering later the regulations that the bureaucracy will
implement in response to its laws. Furthermore, our lawmakers
should require all federal agencies to seek the OK of Congress
before putting any major regulations into effect. Finally, our
representatives should insist that all regulations to have
expiration dates to prevent out-of-date rules from remaining
in force and to compel the bureaucrats to ask for renewal of
regulations they wish to preserve.
Q1 2014 BUSINESS JOURNAL
l PG 51