U.S. Chamber Foundation Analysis Examines the Impact of Regulations on Small Business

March 27, 2017
WASHINGTON, D.C. — A report by the U.S. Chamber of Commerce Foundation provides a view of the broad impact of regulations on America’s business community and shows significant inhibiting effects on free enterprise, entrepreneurship, and especially on small business.
The comprehensive literature review, titled, “The Regulatory Impact on Small Business,” draws from available research and from interviews with small business owners and regulatory experts in an effort to determine the impact of federal, state, and local regulations on small businesses. The aggregation of these resources points to the conclusion that small businesses are disproportionately hurt by burdensome government regulations.
“Small businesses are the foundation of our economy and the embodiment of the promise of American entrepreneurship,” said Carolyn Cawley, president of the U.S. Chamber of Commerce Foundation. “Their vitality is our nation’s vitality, so we care deeply about what they need to succeed. This important report assembles existing pieces of research into a compelling whole, and it points to the critical influence the regulatory environment has on a small company’s ability to launch, to grow, and to thrive.”
Key findings that surfaced in the review of existing literature include:
  • In the past 22 years, federal agencies have published more than 88,000 final rules, of which 15,458 have been identified by federal agencies as having a negative impact on small businesses
  • A small business in New York City has to pay, at a minimum, $1,306 and complete seven paperwork procedures over eight days to start a small business.
  • Small businesses pay on average $11,700 per year per employee in regulatory costs, and the costs of regulation to smaller businesses with 50 employees or less are nearly 20% higher than they are for the average firm.
Beyond the federal level, the study shows that businesses also deal with red tape from state and local governments, the complexity of which can hamper growth and make doing business more difficult. Nevertheless, the review finds that research on the burdens of state and local regulations is surprisingly slim.
The full report and key findings can be found online here
The U.S. Chamber of Commerce Foundation is dedicated to strengthening America’s long-term competitiveness. We educate the public on the conditions necessary for business and communities to thrive, how business positively impacts communities, and emerging issues and creative solutions that will shape the future.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.