Federal Rules Costs Small Manufacturers About $50,000 Per Employee

According to a new study released by the National Association of Manufacturers (NAM), the barrage of regulations being handed down by the federal government is disproportionately burdening manufacturers, costing small firms an average of $50,100 per employee.

The report also found:

• Overall, federal regulations cost the manufacturing sector about $350 billion a year, an amount equal to 12 percent of U.S. gross domestic product.
• The regulatory burden on the manufacturing sector is larger than the economies of 29 U.S. states.
• A small manufacturing company with just 20 employees is required to pay about $1 million annually in regulatory compliance costs.
• For all employers, the average employee regulatory cost was $29,100.
• The total cost of federal regulations in 2022 was approximately $3.079 trillion.
• Since 2012, there has been a $465 billion increase in aggregate regulatory compliance costs.

The opportunity costs of these rules are significant. Surveyed manufacturers said they could enhance their competitiveness if the costs of federal regulation were reduced, for example. Or they could reallocate current compliance funds toward employee compensation, investment, research and development, sales and marketing, reducing prices, or improving return on investment.

Economists Nicole V. Crain and W. Mark Crain conducted the study. Click here  to read it.