Whoever makes two ears of corn, or two blades of grass to grow where only one grew before, deserves better of mankind, and does more essential service to his country than the whole race of politicians put together. —Jonathan Swift
The Office of Management and Budget, in its 2014 Information Collection Budget of the U.S. Government (encompassing fiscal year 2013 data), estimates that it takes citizens 9.453 billion hours to complete the paperwork requirements from 22 executive departments and six independent agencies subject to the survey.
Tax compliance (Treasury Department) represents the bulk, some 75 percent at 7 billion hours.
Note that many compliance hours attributable to the Dodd-Frank law and its agency spawn are not included in the official tally here, but are rather exiled to an appendix on the last page of the Information Collection Budget. We’re early in the life-cycle of that red tape machine, but at least hours are disclosed. Expect growth in these categories and their playing a greater role in future editions.
How does one visualize 9.5 billion hours? I don’t know, but an 80-year human lifespan is 29,200 days. In hours, that’s 700,800 hours.
That means 2013’s 9.5 billion hours of paperwork took up the equivalent of 13,488 full human lifetimes. I’m being generous in saying everyone lives 80 years. And this is paperwork only, not other compliance costs, tasks, duties, restrictions, directives and mandates. Is red tape a time waster? You can decide, you don’t want to hear it from me about how you spend your finite 700,000 hours.
The OMB doesn’t project dollar cost estimates for all these hours, but did allow back in the 2011 edition of the Information Collection Budget that “if each hour [8.783 billion] is valued at $20, the monetary equivalent would be $176 billion.” A corresponding figure for the newer 2014 report would be $189 billion (9.453 billion hours times $20).
The left-leaning Progressive Policy Institute echoed this same figure in When Paperwork Attacks! Five Ideas for Smarter Government, noting that the sum would affix “paperwork” at number five in the Fortune 500 based on “revenues” equivalence.
With respect to OMB’s dollar cost number, one must wonder when was the last time a lawyer or compliance officer was hired for $20 per hour, though. Other hourly labor cost estimates suggest higher costs. The National Federation of Independent Business conducts a survey of members with respect to paperwork compliance costs, and their numbers vary depending upon the type of requirement.
Meanwhile, the Bureau of Labor Statistics (BLS) notes the following hourly wages for basic categories one might regard as relevant in keeping up with complex federal paperwork. All exceed the $20 allowed by OMB.
- Business Human Resources professionals: $52.21.
- Accountants and auditors, $33.15.
- Compliance officers, $29.88.
The last installment of “2014 Paperwork and Red Tape Roundup” noted the salaries of compliance officers in the banking field and referred to environmental compliance complexities. If one were to assume $40 an hour, we’re looking at over $378 billion in paper-shuffling costs alone, let alone compliance with and economic/social impacts of the underlying rules and regulations generating the paper in the first place.
We’ve noted that tax compliance accounts for most paperwork. We also noted that executive agencies presumably tallied paperwork in the regulatory impact analyses, leaving independent agency paperwork to examine. So in the next two installments we’ll look at the tax compliance cost component, and after that, at independent agencies’ paperwork costs.
Next time – Part 3: The Paperwork and Deadweight Costs of Tax Compliance
A 2014 Paperwork and Red Tape Roundup
Part 1: Big Bucks for Pencil Pushers