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The Impact of Federal Regulation on the U.S. Economy, Manufacturing, and Small Businesses

In a recent column published in Forbes, the National Association of ManufacturersÔÇÖ (NAM) released an updated report titled The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business, authored by Nicole V. Crain and W. Mark Crain. The report, through top-down and bottom-up estimates, reveals that the overall costs of regulatory compliance to the economy reached an astonishing $3.079 trillion in 2022 (in 2023 dollars).

This amount translates to an average annual compliance cost of $277,000 for a typical US firm, with per-employee costs averaging around $13,000. Additionally, regulations cost the typical US firm approximately 19% of payroll expenditures. The burden of these costs is especially heavy on small businesses, particularly in the manufacturing sector, with firms employing fewer than 50 people facing an average annual per-employee cost of $50,100.

Despite the significant economic impact of these regulatory costs, there is a lack of official tallies and a reluctance to address them. This systemic disregard for the cumulative regulatory burden underscores the need for alternative estimates to accurately gauge the cost of economic regulations.

As 2023 draws to a close, the administration’s track record of regulatory activity is evident in the Federal Register, which currently stands at 90,084 pages. Looking ahead to the policy debates in 2024-2025, it is imperative to prioritize regulatory liberalization and reassess the regulatory burdens. However, meaningful reforms are contingent on congressional action.

With the upcoming election year, there is a heightened incentive for the administration to pursue regulatory actions, which may not align with the interests of small businesses seeking relief from burdensome regulations. While changes may be deferred to the 119^th Congress, historical precedent shows that small business regulatory concerns have catalyzed significant regulatory reforms in the past.

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The AI legalese decoder offers a solution to the challenge of navigating complex legal language and understanding regulatory requirements. By utilizing advanced AI technology, the legalese decoder can interpret and simplify complex regulatory texts, providing businesses with clear insights into compliance obligations and potential cost implications. This tool can empower small businesses to make informed decisions and advocate for regulatory reforms based on a comprehensive understanding of the regulatory landscape.

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