Friday, August 19, 2011

Own a small business? Good luck!

So here we are in August 2011, our national debt is at throw-up-in-your-mouth levels and the Drudge Report links to a new upsetting story about the economy every hour. Now, President Obama has promised us some sort of jobs plan in September (all of you who are out of work now, just sit tight for the month, okay?), and until then, Obama is touring the country to talk about American jobs in his bus, which was...made in Canada?

Photoshop by @anthropocon
Yeah. Fantastic. I'm inspired, how about you?

We all know the unemployment rate remains alarmingly high, so if you're a small business owner, there are lots of potential employees to chose from. So why are businesses slow to hire?

One of the biggest problems is that the cost of hiring an employee isn't just the direct costs of the wages and benefits that the employee is paid. Taxes and regulation, especially at the federal level, are growing at an alarming rate.

The National Federation of Independent Business (NFIB) has formed a new initiative called "Small Businesses for Sensible Regulation." Their website is full of facts and statistics about the impact of federal regulation on small businesses and ways to get involved. Some of the most powerful statistics I found:
  • According to the Small Business Administration, the annual cost to the U.S. economy of complying with federal regulations is about $10,585 per employee.
  • These government regulations currently cost our economy $1.75 trillion a year, or more than 12 percent of our national GDP.
  • According the Office of Management and Budget, over the past five years, the number of regulations proposed has increased by more than 60 percent. Just the Environmental Protection Agency (EPA) alone currently has more than 330 regulations under consideration.
This is the same federal government that thinks it's OK to regulate what light bulbs we can buy or how much water our toilets flush, so while it doesn't shock me to hear that federal regulation is oppressive to small businesses, I was shocked to see the exact figures. Beyond the quantifiable dollar figure, one of the most damaging aspects of recent government regulation is how unpredictable it has become. If business owners know it will cost an extra $10,000 for every new employee they hire, and they read about thousands of new regulations being currently drafted by regulatory agencies that will radically inflate that cost, it makes sense that they would delay hiring as long as possible before hiring someone new.

The SBSR group is conducting interviews with small business owners to discuss how federal regulation impacts their businesses and hiring decisions. Here are two of the videos (the first one is from a business owner in Port Orange, Florida):

A statement from NFIB, with which I agree:
It is essential that we restore balance to the federal regulatory process. Poll after poll indicate that economic growth and job creation are the highest priorities for Americans, indicating a growing disconnect between the administration's regulatory agenda and the American public's wishes. The administration must not regulate what has not been passed as law through Congress. With thousands of regulations already on the books, the American people would be better served by the government enforcing current regulations rather than writing thousands of pages of new rules.
For more information, check out the, the Sensible Regulations Facebook page, or follow them on Twitter @sensibleregs.

[Cross-posted at The Minority Report]


  1. Well said. Regs of every sort are a deter hiring. But...
    It really is only somewhat marginal. In truth, no matter how difficult it might be - if I or any other owner perceived a potential demand for our services that couldn't be met with our existing workforce - we'd find a way to hire someone.

    However, since demand for EVERYTHING is so weak right now, I've got excess capacity as it is - even thought I've got 1/3 the staff of 2007.

    No demand. No Hiring.

    Of course we could create a new product that would generate some demand - but that's an entire other branch of regulatory hurdles - deserves its own blog post!

  2. I couldn't agree more. We should do what George W. Bush did: create thousands of jobs for Iraq.


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