Small-business owners tend to work longer hours each week than most workers. For instance, according to Gallup, a significant percentage of small-business owners work every day of the week. That’s because it’s not easy to run a successful business, especially one that is just starting up.
So with everything required to keep a business running, why should government make it even harder? When burdensome regulations add to the small business owner’s work week, it simply leaves her less time to focus on the bottom line.
Nevertheless, the Obama administration has been on a tear making it harder by writing new regulations. Right now, there are 3,205 regulations in the pipeline. If you’re a small-business owner, it’s impossible to keep up with all of it.
Big corporations have the resources to look out for themselves. They employ a legion of lawyers, lobbyists and compliance specialists. Meanwhile, the common small-business owner is the CEO, the accountant, the head of human resources and the compliance specialist all in one.
According to two Lafayette College economics professors, small businesses spend nearly $12,000 per employee per year to comply with federal regulations. That’s 30 percent more than it costs large companies.
We want small business generating jobs. Over the past two decades, more than half of job creation has been fueled by small business. Right now, the United States has the lowest labor participation rate we’ve seen for decades. There are millions of people looking for work, and millions more who have stopped looking, but would get off the sidelines in a more robust economy.
When the National Federation of Independent Business asked its more than 350,000 members what their greatest concern is right now, they say it is government regulations and red tape. The newly introduced Small Business Regulatory Flexibility Improvements Act would give small business a greater voice in writing these regulations.
Currently, certain government agencies are required to follow the Regulatory Flexibility Act. This law requires them to consider the direct cost of government rules on a small business. The Small Business Administration’s Office of Advocacy, the sole office within the federal government tasked with voicing the concerns of small business within the bureaucracy, estimates this process saved $4.8 billion in compliance costs in fiscal 2014 alone.
However, there are three ways we can strengthen the RFA and save businesses even more, which the above-noted legislation would do. First of all, we need to expand the law to cover more government agencies. Right now, only the Environmental Protection Agency, the Occupational Safety and Health Administration and the Consumer Financial Protection Bureau have to follow critical parts of these rules. These three agencies write a lot of rules, but that still only represents a fraction of the many rules written every year. This new bill expands small business analysis to every agency.
Second, we need to make sure the agencies also consider the indirect costs of their actions. Many rules affect a small business’ bottom line, but don’t directly regulate them. For instance, the EPA is working to create new rules that would dramatically raise the cost of electricity. They don’t have to consider how many small businesses will be harmed by these new rules because the direct cost is on power plants. The new bill would properly measure those costs as well.
Third and finally, the bill would give the SBA Office of Advocacy a greater voice when it comes to agency compliance with the RFA. Just recently, the EPA and the Army Corps of Engineers radically expanded the reach of the Clean Water Act. The agencies certified that the new regulation wouldn’t have a direct effect on small businesses. The SBA Office of Advocacy called them out, saying that there would certainly be an effect and that the agencies shouldn’t be skipping this critical step. Unfortunately, small businesses will have to sue before the EPA and the Army Corps are required to follow the law.
As chairman of the Senate Small Business and Entrepreneurship Committee and as the CEO of the nation’s largest small business association, we are working together to free small businesses from the strangling red tape coming from the nation’s capital. The Small Business Regulatory Flexibility Improvements Act will help do just that by making bureaucrats listen to the voice of small business owners.
Sen. David Vitter, R-La., is chairman of the Senate Small Business and Entrepreneurship Committee. Dan Danner is CEO of the National Federation of Independent Business.