Big Government Continues to Hurt Small Businesses Most

The Small Business Administration’s Office of Advocacy released a study showing that the burden of government regulation disproportionately falls onto small businesses. Specifically, those with fewer than 20 employees face $2,830 more in per-employee compliance costs than do firms with 500+ employees. In total, firms with less than 20 wage-earners shell out a whopping compliance cost of $10,585 per employee.

Environmental regulations take the cake, however, as small enterprise pays 364 percent more in compliance costs than do large firms. The next most onerous regulation is tax compliance, being 206 percent more expensive for small firms than for their larger counterparts.

Without an army of specialized compliance officers on-hand, small firms are significantly disadvantaged compared to their larger competitors who can afford to achieve economies of scale in regulatory compliance. Unfortunately, without the budget to hire employees solely dedicated to bureaucratic appeasement, small businesses lose competitiveness relative to larger establishments because the former suffers from less efficient regulatory compliance in relation to the latter and also from less production by having to take an employee away from doing something economically productive in order to fill out bureaucratic paperwork.  Sadly, the situation is only poised to get worse with the looming implementation of the regulation-behemoths of Obamacare and the Dodd-Frank Act. Apparently, Washington doesn’t think that $1.75 trillion in total annual regulatory costs on the economy is enough.