In testimony before the House Government Reform Committee's Subcommittee on Regulatory Affairs, NFIB Regulatory Policy Manager Andrew Langer addressed the burden of regulatory paperwork faced by small businesses. For additional information, please contact Stephanie Cathcart at (202) 314-2056.
Paperwork: The Half-Trillion Dollar Elephant
Unreasonable government regulation, especially onerous paperwork burdens, continues to be a top concern for small business. According to a recent analysis by NFIB, the cost of federal paperwork nearly equals the amount Americans spend each year on defense.
Being a small-business owner means, more times than not, he/she is responsible for everything, including ordering inventory, hiring employees and dealing with the mandates imposed by federal, state and local governments. That is why government regulations, and the paperwork they generate, should be as simple as possible. The less time our small businesses spend with "government overhead," the more they can spend growing their business, employing more people and growing America's economy.
- Regulatory costs per employee are highest for small firms, and NFIB's members consistently rank those costs as one of the most important issues affecting small business.
- The cost of regulation for small business has risen by nearly 10 percent, to $7,647 per employee, per year (according to the SBA's Office of Advocacy). This means that for one of NFIB's average members, with five employees, costs now approach $40,000 total annually.
The Half-Trillion Dollar Problem
The Office of Management and Budget issued their annual report on paperwork, the Information Collection Budget. In testimony before the House Government Reform Committee's Subcommittee on Regulatory Affairs, NFIB Regulatory Policy Manager Andrew Langer highlighted the following problems:
- The estimate average per hour cost of paperwork and record-keeping for small businesses is $48.72, according to NFIB's Research Foundation.
- The ICB report denotes an increase of the paperwork burden faced by all Americans of 441 million hours, to 8.5 billion hours total, representing an overall increase of 5.5 percent.
- The cost of the increase in paperwork alone amounts to nearly $21.5 billion annually. The total cost of paperwork is nearly half a trillion dollars (roughly $409 billion).
Comparing Paperwork Costs
- The National Cancer Institute spent $4.83 billion on cancer research last year, more than $400 billion less than the amount paperwork costs to Americans (roughly $409 billion).
- The Department of Homeland Security spent just under $40 billion in FY2005. That is less than one-tenth of what Americans spent on paperwork last year.
- DHS spent just under $4 billion on preparedness, one-one-hundredth of the costs of federal paperwork.
- Spending by the Department of Defense outpaced the cost of paperwork slightly. In FY2005, the DoD spent just over $475 billion—only around $66 billion more than it cost Americans to fill out their paperwork for the federal government. This represents a difference of just 15 percent.
