Lightening the regulatory burden on small business
The U.S. Small Business Administration's Office of Advocacy recently put out a report showing that its annual effort to comply with the Regulatory Flexibility Act saved small business some $6.6 billion in regulatory costs in fiscal year 2005. A key part of the SBA's effort is working with government regulatory agencies early in the rule-making process to discuss the impact of new rules on small business.
It's a major issue. A 2005 study sponsored by the Office of Advocacy showed that the smallest firms bear the largest per-employee burden of federal regulatory compliance costs. Firms with fewer than 20 employees annually spend $7,647 per employee to comply with federal regulations—45 percent more than the $5,282 per employee spent by firms with 500 or more employees. The study also found that the compliance cost per employee for small manufacturers is at least double that for medium-size and large firms. (The annual cost of U.S. federal regulations totaled $1.1 trillion in 2004.)
Given the size of the burden, the SBA's efforts are only a beginning. "This report shows that some positive steps have been made toward lessening the time, money, and effort America's No. 1 job creators spend on regulatory compliance," says Dan Danner, executive vice president of the National Federal of Independent Business. "But Congress, the regulatory community, and small business need to come together to do more." One example of what the NFIB is talking about: Each year, thousands of small-business owners who produce zero lead emissions are forced to file annual paperwork to the Environmental Protection Agency as part of the Toxic Release Inventory reporting program. Earlier this year, the NFIB supported a proposed rule to allow small businesses that produce no emissions to use a less burdensome, short form for their reporting requirements.