08/02/2006
Regulatory costs for small business are significantly higher than the costs that big business faces, as NFIB Manager of Regulatory Policy Andrew Langer testified last month before the House Government Reform Committee's Subcommittee on Regulatory Affairs.
Langer's testimony focused specifically on the regulatory burdens of paperwork. Langer referred to the Office of Management and Budget's annual report on paperwork, which cited an increase of 441 million hours--and $21.5 billion--in the paperwork burden faced by all Americans.
Because the majority of small-business owners are responsible for all aspects of their business, dealing with the onerous amount of government regulations is overwhelming--and expensive. Langer testified that regulatory costs per employee are the highest for small businesses, a cost that is rising.
NFIB members have consistently identified the cost of regulatory burdens as one of the most important issues NFIB should fight to reduce. "The less time our members spend with 'government overhead,' the more money they can spend growing their business, employing more people and growing America's economy," said Langer.
"The cost of regulation for small businesses has risen nearly 10 percent [in five years], to $7,647, per employee, per year," Langer testified. For one of NFIB's average members, a business with five employees, that adds up to almost $40,000 per year.
"For a business operating on a shoestring," Langer said, "such costs can be devastating."
In his testimony, Langer also pointed to the extensive studies conducted by NFIB's Research Foundation about the burden of regulatory paperwork faced by small-business owners. Overall, he said, small businesses need to know exactly what is required of them--and want the shortest and clearest forms possible.
"Their conclusion was that the best thing for small businesses is simplicity," he said, "Simplicity in instructions, simplicity in requirements, and an overall reduction in the size of the paperwork and the time necessary to complete forms."
Langer said that there's not just one way to fix the problem, and discussed various areas that should be addressed to reduce the burden, including the following:
- Congress should consider the repercussions of the regulations before they are passed.
- The Office of Information and Regulatory Affairs, whose job it is to act as gatekeeper for all new regulations, should be fully funded, to properly assess the impact of regulations on small business on a regular basis.
- Eliminate duplicative paperwork.
- Limit the number of information collection requests.
For the full text of Langer's testimony, visit the House Committee on Government Reform's Web site.
