Federal Regulations Cost the U.S. Economy $3 Trillion in 2022

In the latest vindication of our Founding Fathers’ philosophy of limited government, a study found that federal regulations compliance cost the U.S. economy more than a staggering $3 trillion in 2022.

Federal regulations are burdensome, complex, contradictory, and often unnecessary. Even when the regulations can be helpful, they are usually not within the province of the federal government as defined in the Constitution. The Founders recognized that a big government would end up doing far more harm than good, and they have been justified by the disastrous results of our current bloated federal government.

The National Association of Manufacturers (NAM) released a study titled “The Cost of Federal Regulations.” In it, NAM reported:

The NAM’s benchmark Cost of Federal Regulations study finds that the total cost of complying with federal regulations in 2022 is an estimated $3.079 trillion (in 2023 dollars), an amount equal to 12% of U.S. GDP and larger than the manufacturing sector’s entire economic output. This regulatory burden threatens the competitiveness of manufacturing in America, chilling manufacturing investment, job creation and wage growth and blunts the positive impacts of tax reform, the Bipartisan Infrastructure Law and the CHIPS and Science Act.

NAM also provided more numbers to emphasize how onerous federal regulations are. The “Increase in aggregate regulatory compliance costs since 2012” was $465 billion in 2022, and the average annual compliance cost for each American firm was $277,000. For manufacturers, the average per-employee regulatory cost was $29,100. With such expenses, it’s no wonder that many Americans are having a hard time finding jobs.

NAM further said that the average “per employee cost of regulations for small manufacturers,” which they defined as having under 50 employees, was $50,100. Regulations hit small businesses hard, squeezing them of money. Unfortunately, the federal government now seems determined to stamp out the individualism and entrepreneurship that used to characterize Americans.

“In 2022, manufacturers faced stiffer regulatory hurdles compared to similarly sized peers in the economy at-large. The disparity is particularly acute for small manufacturers,” NAM argued. It noted that if manufacturers had the choice, they would use 86% of the funds currently wasted on government compliance to reinvest in either their businesses or employee initiatives. If only there were such a choice.

Both Republicans and Democrats (especially the latter) have become far too supportive of a federal government that has grown astronomically beyond the bounds that our Founding Fathers envisioned. Sadly, as always, it’s small businesses and ordinary American citizens who pay the highest economic price.