Impact of Federal Regulations Grows Even Larger
Randy Wolken, President & CEO
The National Association of Manufacturers (NAM) has recently released an impact study on the multitude of federal regulations U.S. businesses, including manufacturers, must comply with. The costs identified are stunning. It is estimated that in 2022, federal regulations costed our economy over $3 trillion (in 2023 dollars). This is equal to 12% of the U.S. GDP and considerably larger than the entire value of the manufacturing sector’s output. What is even worse, manufacturers bear a much higher share of the burden. Not surprisingly, small manufacturers have the heaviest burden of all.
An average company in our country pays just below $13,000 per employee to comply with federal regulations, whereas the average manufacturer pays over $29,000 per year. Small manufacturers under 50 employees pay the highest of all companies, with over $50,000 per employee per year. These numbers are staggering, making them three times as expensive as the average company!
For all manufacturing firms, federal regulations cost about $350 billion. This is 26% higher than in 2012. As the study points out, the regulatory burden on the manufacturing sector is more significant than the entire economies of 29 states.
U.S. manufacturers can and must be competitive globally. This is hard to do with regulatory impacts this severe. Regulatory reform is a must so we can reduce inefficient, duplicative, and unnecessary regulations. When manufacturers are asked what they would do with the dollars now spent on regulation, they say they would enhance employee compensation to hire and retain more workers, invest in R&D, increase sales efforts, and improve competitiveness in general.
Our members want common-sense reforms that protect the environment and keep the public safe. We can do this while enhancing growth and job creation. NYS manufacturing is already one of the safest and most environmentally friendly industries anywhere in the world – and they want it to remain that way. Excessive and duplicative regulations are just wasteful and counterproductive. Our national regulatory agencies need to work with manufacturers to both accomplish outcomes and reduce the burdens to match what the average companies pay per employee. This is only fair and will result in retaining great jobs and offering the reshoring of vital industries.
To review the study visit https://nam.org/competing-to-win/cost-of-regulations/.