As we move into 2017 many changes and uncertainties are on the horizon. With the change of guard in Washington, there is a hope government regulations will subside. It has been my observation these regulations are much easier to place into law verses the arduous task of unwinding them later. Case and point is Social Security. Social Security was implemented by Franklin D. Roosevelt during the Great Depression to grant temporary relief to countless Americans. This act was designed to serve as temporary relief for the loss of jobs, not a permanent solution for unemployment and retirement. As of June 30th, 2013, 57.5 million Americans are collecting Social Security benefits (18% of the population). Speaking as a business owner myself, I support business growth and less government regulation, but must be cognizant of the lessons history has taught us. As business owners, we cannot afford to bury our collective heads in the sand, but recognize the challenges that lie before us.
Per a 2010 report submitted for the SBA (Office of Advocacy) by Nicole v. Crain and Mark Crain of Lafayette College, U.S. federal government regulations cost an estimated $1.75 trillion in 2008. This amount was equal to 14 percent of U.S. national income. When combined with U.S. federal tax receipts, which equaled 21 percent of the national income in 2008, these two costs of federal government programs consumed 35 percent of the national income. This represents a tremendous burden on both small businesses and the populace in general. This number, adjusted for inflation, could easily be estimated north of $2.2 trillion in the year 2016.
Regulatory Compliance Costs for by Firm Size in 2008 and adjusted for inflation in 2016
Cost per Employee
|Regulations||2008 -All Companies||2016 Estimate All Companies||2008 Fewer than 20 EEs||2016 Estimate Fewer than 20 EEs||2008 – with 20 -499 EEs||2016 – w/20-499 EEs||2008- w/500+ EEs||2016 w/500+ EEs|
|Occupational Safety & Health, Homeland Security||$610||$768||$781||$984||$650||$819||$520||$655|
The burden of compliance is much greater for small companies verses their larger counterparts. Big companies can aggregate these costs over more people and larger revenue sources. For example, a company with 20 employees would incur estimated compliance costs of $267,000 per year in today’s dollars. Companies are faced with the dilemma of educating themselves and instituting processes for compliance with these regulations. Coupled with the demands of compliance and creating new business opportunities, small to medium size companies are struggling to maintain profitability.