They create two out of every three new jobs and are telling everyone they have no plans to hire in the next six months. They’ve also said why: regulations.
They are the small-business owners of America, and without them no economic recovery is possible. So why hasn’t their main complaint been taken more seriously, especially since Americans agree that among our nation’s primary goals are the creation of jobs and the growth of the economy?
Too often, small-business owners find that growing their businesses is like trying to drive with one foot on the gas pedal but the other on the brake.
In this case, the “brake” is the complex, burdensome number of regulations facing small businesses. If we want Colorado to improve on its current 7.2 percent unemployment rate, we need to ease this burden.
As family business owner and state Rep. Libby Szabo recently put it, “When businesses are spending 20 percent to 30 percent of their resources on compliance, that doesn’t leave any room for hiring, which in turn keeps unemployment high.”
In fact, the state’s regulatory burden was an impetus for Szabo’s decision to run for office.
“It’s when government takes a hands-off approach that businesses can thrive and create a stable economic environment,” she has said.
Unfortunately for Colorado, legislation to reform state regulations failed to pass during the legislative session earlier this year. It is beyond disappointing that efforts to ease the regulatory burden on small businesses didn’t even make it out of the first committee.
But as bad as the state and local regulatory environments can be, it is still the federal government with the biggest foot on the Superman’s cape of primary job-creators.
The number of federal regulations — and expenditures related to enforcing those regulations — has grown enormously in recent decades. Cumulative federal regulatory budgets have grown from approximately $500 million in 1960 to more than $58.5 billion in Fiscal Year 2013.
Small-business owners continually cite our arcane regulatory system as a major impediment to growth and a strong economic recovery. According to a Capital One small-business survey, 67 percent of small businesses do not have plans to hire in the next six months due to poor business conditions.
It isn’t easy for a small business to comply with the myriad federal regulations that can affect it. These businesses do not have the resources of large corporations that have entire compliance departments.
In fact, complying with federal regulations is their No. 1 problem, according to a Gallup poll. Agencies don’t ask small businesses how new regulations will affect them; in fact, more than a third of major rule decisions were made without public review and input, according to the U.S. Government Accountability Office.
If we want to put more Coloradoans back to work and see better than middling improvement in our economy, we need to allow small businesses to drive forward without riding the brakes.
NFIB and Small Businesses for Sensible Regulations [sensibleregulations.org] have proposed a series of principled reform measures to encourage a pro-growth business environment that will encourage small businesses to hire workers and expand operations.
These reforms include increased input from small businesses, greater openness and transparency, more thorough cost-benefit analysis and regulations that are grounded in hard science, and objective data as steps to improve our federal rulemaking process.
We have suffered through the most lackluster economic recovery in modern memory. We can’t continue down this road of piling on new regulations and expect that to change.
Pushing the brake pedal harder won’t help — we need to reform this burdensome process.
Tony Gagliardi is Colorado state director for the National Federation of Independent Business.