How Much Does Regulation Burden Employment?

For every $1 billion in regulatory compliance, employment in the industry affected drops by 3.6 percent, says a new report from Sam Batkins, Director of Regulatory Policy at the American Action Forum, and policy analyst Ben Gitis.

The researchers examined 148 regulations to determine the cumulative impact of regulatory compliance on an industry’s employment levels. Looking at 44 industries — comprising nine percent of total private employment in the U.S. in 2012 — the study assessed the impact of all final rules between 2001 and 2012 that the respective agencies said would affect certain industries.

The cost of these rules varied, ranging from just a few thousand dollars each year to more than $10.8 billion annually. The authors looked at a broad range of industries, from day care to drug stores to automotive repair and building inspection services.

The report found that for every $1 billion in new regulatory costs, employment in the regulated industry declines 3.6 percent. For an average industry, that is a loss of 8,101 jobs.

Because this measure demonstrates how the total cost burden of all new regulations affects employment, the authors urged regulators to consider existing regulatory burdens when they issue new rules.

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