Hidden Tax Hike? Regulations Suck $3 Trillion from U.S. Economy

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A study has found that the U.S. government’s compliance with federal regulations cost the economy over $3 trillion in 2022.

Federal regulations can be burdensome, confusing, contradictory, and unnecessary. Even when regulations are helpful, they usually do not fall under the jurisdiction of the federal government according to the Constitution. The Founders knew that a large government would do more harm than good. They were justified by our current federal government’s disastrous results.

NAM (National Association of Manufacturers) published a report titled, “The Cost of Federal Regulations.”

According to the benchmark Cost of Federal Regulations Study by the NAM, the cost of complying with federal regulations is estimated at $3.079 trillion in 2023 dollars. This amount equals 12 percent of the U.S. Gross Domestic Product and more than the entire manufacturing industry output. This regulatory burden threatens the competitiveness and growth of the manufacturing sector in America. It will reduce manufacturing investment and job creation, and it will also dampen wage growth.

NAM provided additional numbers to highlight how burdensome federal regulations are. In 2022, the “Increase in aggregate compliance costs since 2012”, was $465 billion. The average annual compliance cost per American firm is $277,000. The average cost per employee for manufacturers was $29100. It’s not surprising that so many Americans have trouble finding work with such high costs.

NAM also stated that the average cost per employee of regulations for small manufacturing companies, which they define as having less than 50 employees, is $50,100. Small businesses are hit hard by regulations, which drain them of their money. The federal government seems to be determined to eliminate the entrepreneurial spirit and individualism that Americans used to have.

In 2022, the regulatory burden on manufacturers was higher than that of their peers from other sectors. NAM said that the disparity was particularly acute among small manufacturers. The report noted that, if given the option, manufacturers would reinvest 86% of funds wasted on government compliance into their business or employee initiatives. It would be great if there were a way to choose.

Republicans and Democrats, especially the Democrats, have been far too supportive of a federal administration that has grown beyond the limits that our Founding Fathers imagined. As always, small businesses and everyday Americans pay the most economic cost.