NEWSRELEASE
For Release: September 19, 2005 Small Business Hard Hit By Federal Regulatory New Study Shows Smallest Firms Bear Largest Per Employee
Burden WASHINGTON, D.C. - America’s smallest firms bear the largest per employee
burden of federal regulatory compliance costs, according to a study released
today by the Office of Advocacy of the U.S. Small Business Administration. Firms
with fewer than 20 employees annually spend $7,647 per employee to comply with
federal regulations, compared with the $5,282 spent by firms with more than 500
employees. The report measures disproportionate regulatory compliance impact on small
business. The study finds that small business faces a 45 percent greater burden
than their larger business counterparts. The report thoroughly analyzes compliance costs for economic, workplace,
environmental, and tax regulations. It details regulatory costs for five major
sectors of the U.S. economy: manufacturing, trade (wholesale and retail),
services, health care, and other (a residual category), revealing that the
disproportionate cost burden on small firms is particularly stark for the
manufacturing sector. The compliance cost per employee for small manufacturers
is at least double the compliance cost for medium-sized and large firms. Among its other findings, the report also shows that the annual cost of
federal regulations in the United States totaled $1.1 trillion in 2004. The peer-reviewed study, The Impact of Regulatory Costs on Small Firms,
written by W. Mark Crain with funding from the Office of Advocacy,
updates two earlier reports from 1995 and 2001, which showed similar patterns of
disproportionate regulatory burden borne by small businesses. The Office of Advocacy, the “small business watchdog” of the government,
examines the role and status of small business in the economy and independently
represents the views of small business to federal agencies, Congress, and the
President. It is the source for small business statistics presented in
user-friendly formats and it funds research into small business issues. For more information and a complete copy of the report, visit the Office of
Advocacy website at
Contact: John McDowell, (202) 205-6941
john.mcdowell@sba.gov
SBA Number: 05-43 ADVO
Press Kit
Compliance Burden
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The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. For more information, visit
www.sba.gov/advo, or call (202) 205-6533.