Dueling Reports Suggest Economic Impact of Regulations Uncertain

Posted 17 April 2012 | By

Two reports issued in April paint markedly different pictures about the effects of regulatory policies on the broader economy.

The first, a report commissioned by the US Chamber of Commerce (CoC), a politically powerful trade coalition of businesses, found that concerns about "over-regulation" were "the highest we've seen in the past year."

CoC's study of its 536 member and 803 non-member small businesses found 42% of small businesses citing "over-regulation" as their highest concern and 52% citing regulations as the "top threat" to their businesses. A further 80% of respondents polled indicated various regulations were making it more difficult to hire additional employees, while 73% specifically cited the Patient Protection and Affordable Care Act (PPACA) as having an adverse effect on their hiring outlook.

While the "regulations" referred to in the report cover a wide range of agencies and types-healthcare, environmental, tax, labor, banking and energy regulations, to name but a few-the findings are in line with the CoC's narrative that the totality of regulations are having an adverse effect on the health of the business environment.

That narrative, opines Bloomberg's Deborah Solomon, is pretty far off base, and leaves out one side of the equation entirely: benefits.

Solomon cites a number of studies seeking to study the actual impact of regulations on hiring and the economy, and says the evidence shows "we ought to take claims of regulatory-related unemployment with a grain of salt" given their wide margins for error when evaluating the same regulations.

In fact a new study by the nonpartisan think tank Institute for Political Integrity says many of the studies claiming to show job losses or gains "use poorly executed economic models that do not accurately measure true costs and benefits," writes Solomon.

"The report suggests policymakers focus on cost-benefit analyses, rather than job impact, when making decisions about rules. As it now stands, the report states, job-impact studies are "a misleading distraction -- nothing more than a red herring."

Read more:

Chamber of Commerce - United States Chamber of Commerce: Q1 Small Business Outlook Study

Institute for Policy Integrity - The Regulatory Red Herring: The Role of Job Impact Analyses in Environmental Policy Debates

Bloomberg - Killing the "Job-Killing Regulation" Meme


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