Earlier this month, we discovered that only 80,000 jobs were created in June, ending the weakest quarter for job creation in the past two years. These anemic jobs numbers demonstrate that the private sector and our biggest job creators, small businesses, are not, contrary to President Barack Obama’s assertion, doing fine.
Small-business owners continue to say compliance with government regulations is one of the most burdensome problems facing them today. A U.S. Chamber of Commerce poll from March found that 52 percent of small-business executives surveyed cited regulations as the top threat to their businesses. According to a Small Business Administration study, regulatory compliance costs for small businesses are about 35 percent higher than for large businesses.
Despite the economic downturn, the regulatory burden faced by small businesses continues to grow. Increased regulations mean small businesses have less money, resources and time to dedicate to growing their business and creating jobs.
In 1980, Congress recognized the threat of regulations to small firms and passed the Regulatory Flexibility Act to provide some relief. Because small businesses face disproportionately higher regulatory compliance costs, the law requires federal agencies to analyze the effects of regulations on small entities and, if they are significant, consider less burdensome alternatives. In too many instances, federal agencies find loopholes to get around this statute.
In a June 27 Small Business Committee hearing, we heard from the U.S. Chamber of Commerce and small-business owners about the Environmental Protection Agency’s noncompliance with the Regulatory Flexibility Act. The EPA is among the most active federal agencies when it comes to regulations, completing or proposing 257 in 2011 alone. Because Congress recognized the EPA to be such a prolific rule writer, the Regulatory Flexibility Act requires the agency to get input directly from small businesses on regulatory proposals before they are finalized by convening special small-business panels.
Since 2009, the EPA has failed to comply with the act and the panel provision in promulgating major rules. As Jeff Brediger of Orrville Utilities in Orrville, Ohio, testified, “Although the [Regulatory Flexibility Act ] process is intended to provide small entities with an expanded opportunity to participate in the development of certain regulations, the process lately has taken on the look of window dressing, with EPA simply ‘checking the box.’”
The act is intended to give small business a voice in the regulatory process. When the EPA fails to meet its obligations under the law, it silences small businesses. Additionally, the EPA misses the opportunity to gain valuable small-business insights that may improve the quality of rules and avoid unnecessary economic harm.
Americans have now seen 41 consecutive months of unemployment above 8 percent, and consumer and small-business confidence continues to decline. It’s time to change direction and give some hope and certainty to our nation’s job creators. The administration cannot continue to spew regulations without serious consideration of the effects of such actions on small businesses’ ability to plan, invest and hire.
Last December, the House passed the Regulatory Flexibility Improvements Act, which I co-wrote with House Judiciary Chairman Lamar Smith (R-Texas). This legislation would strengthen the Regulatory Flexibility Act and close loopholes that agencies exploit to avoid complying with the law. Unfortunately, it is stalled in the Senate and the president has threatened to veto it. This week, the House will vote on the Red Tape Reduction and Small Business Job Creation Act, a bill that would halt major regulations, and provide relief for small businesses, until the economy improves.
Failure to act on these common-sense jobs bills seems indicative of this administration’s attitude toward small businesses and our struggling economy — apathetic and out of touch. Even this simple, common-sense step to help entrepreneurs is rejected in favor of a government-knows-best philosophy. Our economy will continue to sputter without any real momentum unless small businesses have the certainty they need to perform their role as our nation’s main job creators.
The government can start by listening to small-business concerns and taking them to heart so that the rules and policies imposed won’t drag down our economy further.