From The Editor

NAM Study Says Costs of Regulation are Rising

By on
MCN Editor Dan Markham

The ability to strengthen and develop the U.S. manufacturing base could be hampered by the high costs of regulations. That was one conclusion drawn from a recent study commissioned by the National Association of Manufacturers.

The NAM survey determined the total cost of federal regulations in 2022 was $3.079 trillion, an amount equal to 12 percent of U.S. GDP and larger than the total output of the manufacturing sector. 

The report indicates the average U.S. company pays $13,000 per employee annually to comply with federal regulations. But the story is even worse for manufacturers, particularly the smaller ones.

The average manufacturer in the United States pays more than $29,000 per employee per year. And for U.S. manufacturers with fewer than 50 employees, the study suggests the average cost is $50,100 per employee per year.

“The unbalanced federal regulations make it challenging to grow manufacturing in America by siphoning resources away from job creation and our communities,” said NAM President and CEO Jay Timmons. “The burden continues to grow year after year, undermining the bipartisan achievements from President Biden and Congress that have prioritized manufacturing – including the Infrastructure Law and the CHIPS and Science Act. It is chilling investment, curtailing our ability to hire new workers and suppressing wage growth, especially for small and medium-sized manufacturers. It is time for the Biden administration to take action to reverse course.”

NAM commissioned the analysis by economists Nicole V. Crain and W. Mark Crain, who continued a three-decade effort to analyze the total cost of federal regulations, and how the burden is distributed across sectors and firm sizes.

More details on the study can be found here.