The Impact of Federal Regulations on U.S. Manufacturing

From providing goods to creating countless jobs, the manufacturing sector has always been the engine of economic growth in the United States. Despite the downward trend that the manufacturing sector has experienced in the last 50 years, it has been the one bright spot in an otherwise sluggish growth period for the economy, says Thomas A. Hemphill, an associate professor of strategy, innovation and public policy in the School of Management, University of Michigan-Flint.

The most surprising fact about the manufacturing sector’s comeback is that it has been in the face of onerous federal regulations. The Manufacturers Alliance for Productivity and Innovation (MAPI) released a study in 2012 to examine the impact of federal regulations on the manufacturing sector. They find:

• Since 1998, the costs of regulations have exceeded manufacturing growth by an annualized rate of 7.6 percent.

• In 2010, the cost of major regulations could reduce the value of shipments from U.S. manufacturers by $500 billion and manufacturing exports by 17 percent.

• The U.S. GDP loss attributable to the regulations ranges from $240 billion to $630 billion.

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