Consumer Product Safety Law Backfires, Killing Thousands of Jobs

A consumer-product safety law recently passed by Congress will drive up the price of children’s clothes and toys and put thousands of small toymakers and children’s clothing makers out of business. (We wrote earlier about how it will enrich trial lawyers and “may actually harm safety“).

As Walter Olson notes in Forbes Magazine, the Consumer Product Safety Improvement Act (CPSIA) is

“now shaping up as a calamity for businesses and an epic failure of regulation, threatening to wipe out tens of thousands of small makers of children’s items from coast to coast, and taking a particular toll on the handcrafted and creative, the small-production-run and sideline at-home business, not to mention struggling retailers. How could this have happened? Congress passed CPSIA in a frenzy of self-congratulation following last year’s overblown panic over Chinese toys with lead paint. . .Barbed with penalties that include felony prison time and fines of $100,000, the law goes into effect in stages; one key deadline is Feb. 10, when it becomes unlawful to ship goods for sale that have not been tested. Eventually, new kids’ goods will all have to be subjected to more stringent “third-party” testing, and it will be unlawful to give away untested inventory even for free. The first thing to note is that we’re not just talking about toys here. With few exceptions, the law covers all products intended primarily for children under 12. That includes clothing, fabric and textile goods of all kinds: hats, shoes, diapers, hair bands, sports pennants, Scouting patches, local school-logo gear and so on. And paper goods: books, flash cards, board games, baseball cards, kits for home schoolers, party supplies and the like. . .makers of these goods can’t rely only on materials known to be unproblematic (natural dyed yarn, local wood) or that come from reputable local suppliers.”

“Instead they must put a sample item from each lot of goods through testing after complete assembly, and the testing must be applied to each component. For a given hand-knitted sweater, for example, one might have to pay not just, say, $150 for the first test, but added-on charges for each component beyond the first: a button or snap, yarn of a second color, a care label, maybe a ribbon or stitching–with each color of stitching thread having to be tested separately.”

“Suddenly the bill is more like $1,000–and that’s just to test the one style and size. The same sweater in a larger size, or with a different button or clasp, would need a new round of tests–not just on the button or clasp, but on the whole garment. The maker of a kids’ telescope (with no suspected problems) was quoted a $24,000 testing estimate, on a product with only $32,000 in annual sales. Could it get worse? Yes, it could. Contrary to some reports, thrift and secondhand stores are not exempt from the law.”

We were virtually alone in opposing the law back in 2007. The bill passed the House by a vote of 424-to-1 and the Senate by a vote of 89-to-3.

The law’s sponsors are now trying to avoid responsibility for the regulatory train-wreck their law is causing by proposing cosmetic fixes to the law, which will not be enough to prevent thousands of jobs from being lost. Their cosmetic changes are just a political ploy, to avoid responsibility for the catastrophic consequences of the law, which they do not want to change because it enriches their trial lawyer allies.

Any changes to this wasteful law will come too late for many retailers and poor families searching for cheap clothing for their kids. ”Regulations set to take effect next month could force thousands of clothing retailers and thrift stores to throw away trunkloads of children’s clothing.”