The U.S. Small Business Administration’s (SBA’s) Office of Advocacy has issued a new report consistent with its previous studies concluding that small businesses still face a disproportionate burden of federal regulatory costs compared to larger firms. “The Impact of Regulatory Costs on Small Firms” details regulatory costs for five major U.S. economic sectors: manufacturing, wholesale and retail trade, services, health care, and “other” sectors not included in the previous four categories.
Among other matters, the report includes data about economic regulation, which are those rules affecting how businesses operate, that is, “what products and services they produce, how and where they produce them, and how products and services are priced and marketed to consumers.” The total burden on business of economic regulations increased $63 billion between 2004 and 2008, according to the report, and small companies with fewer than 20 employees spent in total almost as much complying with them as firms with more than 500 employees. The report also noted that compliance with environmental regulations on a per employee basis costs small firms 364 percent more than large firms, and tax compliance costs 206 percent more.
SBA Chief Counsel for Advocacy Winslow Sargeant said in a statement that the report “shows that on a per employee basis it costs small firms $2,830 more than larger firms to comply with government regulations. That is a 36 percent difference and that is an unfair burden to place on American small business.” Findings show that the disproportionate impact is “particularly stark” for the manufacturing sector and that the “other” category shows a high level of disproportion between small and large firms. The report states that small manufacturers face more than double the compliance cost per employee than medium- and large-sized firms. See SBA News Release, September 21, 2010.