NCPA - National Center for Policy Analysis

Over-Regulation Is Pricey

June 12, 2012

Economic reports show that job growth in federal regulatory agencies has far outpaced the growth of traditional occupations, says Deroy Murdock, a media fellow with the Hoover Institution.

Crucially, these regulators propose rules and fees that have a stifling effect on the economy as a whole.  Businesses spend enormous time and effort in code compliance efforts, and the costs of such compliance attempts often preclude additional hiring or investment.

  • The ranks of these employees have swelled during the current administration by 5.5 percent from 1,289,000 to 1,360,000.
  • While many of these federal employees do not regulate, per se, 291,676 of them do, up 17 percent under Obama.
  • Researchers at Engage America have calculated that federal red tape has squelched at least 779,203 potential jobs from the economy.
  • If these positions were filled, today's unemployment rate would fall from 8.2 percent to 7.7 percent.
  • Citing a Small Business Administration study, Clyde Wayne Crews of the Competitive Enterprise Institute explains that complying with these regulators cost the U.S. economy $1.75 trillion in 2008.

Notably, not all regulations are bad, nor are all regulators bent solely on the constriction of the labor market.  Many are important for guaranteeing the public safety or for checking the growth of economic activities with significant negative externalities.  Yet the rapid growth of the power of regulatory agencies and the rules they produce suggest that the regulatory environment is out of control.

  • Regulatory officials imposed 3,807 new rules in 2011, or 15 every federal business day.
  • These new regulations filled 81,247 mind-numbing pages in last year's Federal Register.
  • The resulting, incredibly complex, legal atmosphere creates victims where they need not occur: Salt Lake City's Davis High School, for example, was fined $15,000 for forgetting to unplug a soft drink vending machine in its bookstore.

Continuing regulations, such as "Conservation Standards for Wine Chillers and Miscellaneous Refrigeration Products" and "Efficiency Standards for Microwave Ovens (Standby and Off Mode)," should be greeted with greater skepticism.  Regulators should question just how much their 15 new rules per day are truly serving the interests of the people.

Source: Deroy Murdock, "Over-Regulation Is Pricey," National Review, June 5, 2012.

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