A recent study released by the federal government’s Small Business Administration stated that the regulatory cost per employee for small businesses with less than 20 employees is $7,647.

It can be reasonable to assume that this number is not an "under-estimate."  Which makes the release of this number especially troublesome.  What is the impact of regulatory costs on entrepreneurism? On new job creation?  On job retention?

When an entrepreneur is evaluating the feasibility of creating a new business and new jobs, these costs become a singificant part of the economic and financial calculations that go into the feasibility assessment of a new startup.  Is it realistic to believe that new businesses can be created in an environment where the regulatory costs are so high?

When a small business owner is evaluating the prospects of expanding their business operations, is it realistic to believe that they will take on the risk of expanding their business?

When a small business must compete in the modern global competitive marketplace; can they compete with the regulatory cost burdens imposed upon them by our current regulatory environment?  When businesses are faced with increasing competitive pressures, can they afford to keep their jobs and business operations in the US under these regulator burdens when alternatives are available offshore (where their global competitors are often already operating)?

It is a significant challenge for most small business owners to consider.  It is an even more important challenge for our economic and public policy leaders to consider.  Not only must our elected officials carefully monitor and control the appropriate public policy protections that are appropriate, but they must evauate the effectiveness of the regulator bureacracies that may not be effectively implementing those policies.  It is time for public policy discussions to not only discuss the merits of legitimate public policy needs, but also the merits of the regulatory bureacracies and methodologies used to implement and enforce those public policy goals.

Can small businesses compete in a competitive global marketplace under the deadweight burden of such high regulatory costs?  It is a challenge at best … and a significant contributing factor in decision making processes about new business startups, new job creation, job retention, and offshoring.


Filed under: ResearchUncategorized

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