PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

“Pulse” Survey: Small Business Owners Weigh in on Regulation

By at 27 December, 2023, 6:12 pm

by Raymond J. Keating – 

Whether targeted at “big business” or not, we all pay for unnecessary and costly regulation. As made clear, once more, in SBE Council’s latest “Small Business Check Up Survey,” small business owners understand this quite well, as the costs of regulation fall heaviest on smaller enterprises.

Cost of Federal Regulation

As noted in an updated study released by National Association of Manufacturers and authored by economists Nicole V. Crain and W. Mark Crain (“The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business”), the burdens of federal regulations fall harder on small firms.

For example, the annual per employee costs of regulations registered $14,700 (2023 dollars) for small businesses with fewer than 50 employees, $13,800 for firms with 50-99 workers, and $12,200 for firms with 100 or more employees.

And the difference was even more striking among manufacturers, with per employee costs of regulations registering a staggering $50,100 for small manufacturers with fewer than 50 employees, $28,000 for manufacturers with 50-99 workers, and $24,800 for manufacturers with 100 or more employees. And keep in mind that manufacturing is overwhelmingly populated by small businesses, with 93.1 percent of employer manufacturing firms having fewer than 100 employees (according to the latest Census Bureau data (2020)).

Small Business Views on Regulation

Given that the U.S. economy very much is a small business economy, elected officials, policymakers, analysis, and talking heads would be wise to consider the views and expectations of small business owners.

And SBE Council’s latest “Small Business Check Up Survey” is rich with critical findings regarding the views of small business owners on a host of issues, including, for example, on the matter of regulation.

● 45 percent of small business owners view new regulatory threats as negatives for their business.

● Keeping in mind that 53 percent of small business owners agree that lack of available credit or access to capital is hampering their company’s operating capacity, according to the latest survey, it’s not surprising that the Fed’s proposed Basel III changes, that is, regulations that would raise banks’ capital requirements, create real concerns among small business owner, with 79 percent expecting a negative impact on capital availability. (See the following chart.)

● As for President Biden on regulation, small business owners give him poor grades, with 31 percent giving him an “F,” and 19 percent a “D.” For good measure, 26 percent assign a middling “C.” That leaves only 14 percent giving Biden a “B” on regulation and 6 percent an “A.”

Entrepreneurs, investors and their employees drive economic, income and employment growth, and yet elected officials and their employees seem to go out of their way to impose additional costs and burdens via new and expanding regulation. Small businesses, workers and our economy need a serious, comprehensive effort at deregulation. Nonetheless, politics and economic ignorance dominate, and America gets saddled with ever-growth, counter-productive regulations.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.

 

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