Does over regulation have economic impacts? Does over regulation cost jobs?For me, it would seem to be obvious that the answer to both questions is yes. But, if you were to Google “over regulations kill jobs”, as I did this morning, you would find some articles that agree with me but you would find many more articles that take the position that regulations have minimal impact on jobs. To say the least, I was surprised. My personal experience in the corporate world say otherwise.
Fox News had a panel discussion a couple of weeks ago that in part dealt with this question:
ARE WE GETTING PROOF THAT GOVERNMENT REGULATIONS KILL JOBS IN AMERICA?
The link has both a video of the panel discussion and a transcript. I am going to focus on just what the very first commenter had to say:
TRACY BYRNES: Cheryl, you said it. One hundred and sixty one thousand dollars a year it costs businesses. Those are multiple employee salaries. Right now small businesses are paying an average of 11 thousand dollars per employee just to follow all of these dumb rules, and the administration plans on instituting another two hundred and nineteen regulations this year. Lord, all these businesses do is spend time complying with regulation. What about innovation and expanding the business? There’s no time for that and there’s certainly no money left for that. (Emphasis added)
Look again at the part I put in bold and underlined. $161,000 per year for a business? Really? I’m not buying it for a moment. My guess is that, for many corporations, just to comply with EPA, SEC, OSHA and, IRS regulations, the cost per year is ten to twenty times that amount. Let me relate some personal experience from twenty-five years ago.
In 1986 I was General Manger of one of three divisions of a moderate sized mining corporation. the cost for my division alone to comply with just the EPA regulations was around $500,000 per year. Then there was the costs of complying with the MSHA (the equivalent of OSHA for the mining industry) regulations, SEC regulations( internal and external audit costs) nd the cost of compiling all the information the corporate offices need to do their IRS fillings, my divisions total cost for regulatory compliance was around $1,000,000 per year. So, with three divisions, this moderate sized corporation was spending about $3 million per year on regulatory compliance twenty-five years ago. Imagine what it must be today.
I am not suggesting that here shouldn’t be any regulations. As a society, we are all subject to regulation in the form of the criminal and civil laws, which we must comply with. But, complying with criminal and civil laws (regulations) cost us very little and we don’t have to file tonnes of paper work, with the exception of IRS fillings, to prove we are in compliance with the criminal and civil laws. But in the business world there is a tonne of paper work that must be filed with government on a regular basis.
There can be no question that regulations add significantly to the cost of doing business in this country. Regulations do have an important impact on the economy and, therefore, jobs. I’m going to leave you with this Fox News video that I borrowed from the great Truth in Exile blog. It is an interview with Peter Schiff that I think you will find interesting and clearly demonstrates how regulations have affected his ability to hire people.
Well, that’s what I’m thinking. What are your thoughts?