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Report  | March 2017

The Regulatory Impact on Small Business: Complex. Cumbersome. Costly.

By Nam D. Pham, Ph.D.

Government regulations have a disproportionate impact on small businesses and free enterprise in America. This study assesses the impact of regulations on America’s small businesses as well as existing approaches to regulatory reform. The results provide distinct insights for the business community to help it comply with, and push back, the regulatory state. 

Key findings include:

  • Government regulations have a sizable impact on free enterprise in America, disproportionately impacting small businesses.
  • Federal regulations alone are estimated to cost the American economy as much as $1.9 trillion a year in direct costs, lost productivity, and higher prices. The costs to smaller businesses with 50 employees or fewer are nearly 20% higher than the average for all firms.
  • Every $1 increase in per capita regulatory expenditures are directly correlated with decreases in the smallest firms (those employing between one and four persons) by 0.0156%, a figure whose burden quickly adds up.
  • Based on the current regulatory climate, nearly one in three chamber executive researchers spoke with as a part of this project say they would not actively encourage new business establishment and relocation in their regions. More than two-thirds reported that federal regulations have become “more” or “much more” significant over the past several years.