Recently, the Department of Labor (DOL) released a new overtime regulation, raising the eligibility ceiling for overtime pay. The price tag for employers to comply with the new regulation equates to around $592.7 million.
Sadly, the DOL’s regulation is just one of the pieces burdening business in a jungle of red tape.
A National Association of Manufacturer report estimates federal regulations cost $2.028 trillion in 2012 (in 2014 dollars), an amount equal to 12 percent of our country’s GDP. Manufacturer regulatory compliance costs an average manufacturer $19,564 per employee and for a small manufacturer of 50 employees or less, the cost is estimated at $34,671 per employee annually. The impact of onerous federal regulation is not limited to manufacturers, however. This type of red tape is strangling businesses in all sectors across the nation.
A small business’ ribbon cutting will not be the last tape they cut through
Regulation is the hidden tax of business – and ultimately consumers. Federal regulation incurs higher cost in the form of legal compliance, as well as additional guidance from accountants, lawyers and human resource consultants. Larger firms are more likely to distribute the costs, but small business are less capable of absorbing the burden. Ultimately, overregulation declines small business investment and start-ups, hinders innovation and disrupts economic growth.
The impact is apparent; yet the burdensome economic regulation continues. This past year, a new record was set with issuance of 2,334 proposed federal rules, totalling 81,611 pages of new rules, from last year’s 77,687 pages. Bureaucratic regulation is the result of broad stroke policy in the form of statutory laws passed by Congress that often contain vague instruction and leave agencies to interpret and implement the policy at their discretion.
In an effort to regain control, Senator Mike Lee (UT) has sponsored S. 2982, a bill that amends the Congressional Budget Act of 1974 to establish a federal regulatory budget with cost controls. A regulatory budget bill gives Congress the oversight to prevent agencies from exceeding a specified cost for regulation, incentivizing reduction of current rules and helping to curb federal regulations collectively. Other members of Utah’s federal delegation have also been active on promoting smarter solutions.
For example, Senator Orrin Hatch worked tirelessly to include Infrastructure Permit Streamlining language in the most recent transportation bill, something that will significantly improve interagency discord, ever-receding schedules, uncontrolled agency costs, and unanticipated externalities. This new level of certainty for business will unlock private-sector investment and the jobs associated with it. Business is efficient and our regulatory structures should reflect that principle.
Utah’s economy is one of the strongest in the nation but outer influences can carry disruptive consequences. We see that our regulatory landscape is the source of our economic growth.
It is time to untangle our regulatory system and free our businesses trapped inside.