On Friday, January 20, the new Trump administration was officially sworn in to office. News outlets across the country covered the event and hosted discussions about the impact of the new administration on businesses and the American economy.
Steele and Ungar’s POTUS (Politics of the United States) show on Sirius XM Satellite Radio was centered around the impact of regulations on businesses—particularly on small to midsize manufacturers. On this show, Marlin CEO and National Association of Manufacturers (NAM) Small and Medium-Size Manufacturers Group Chair Drew Greenblatt discussed the impact of excessive and unnecessary regulations.
The Problem of Excessive Regulations
Here’s an interesting fact to consider: according to a recent study by the NAM, “American manufacturers are subject to 300,000 regulations.” The number left the show’s hosts nearly speechless for a second. This is a nearly impossible burden for any business to have to operate under.
How burdensome are these regulations to the manufacturing industry? The impact of each one varies, but here’s an example that Drew brings up in the show:
When Marlin Steel first implemented 401ks with matching in 2011, the goal was to help provide for employee retirement. In setting up this 401k plan, Marlin’s CEO had to fill out a 30+ page document with multiple signature lines. Drew signed three separate times and filed the paperwork.
Two years later, Marlin Steel got a $15,000 fine in the mail because there was a fourth signature missing from the small book of regulations that the CEO needed to fill out. There was no violation of any rule, no malfeasance in the handling of the money—just one missing signature that cost the company $15,000.
Imagine, if you would, that you had to follow 300,000 regulations to get a driver’s license, and failing to follow any one of them could result in a $15,000+ fine—there’d probably be a lot fewer drivers on the road.
This is the reality that anyone looking to start a manufacturing business in the USA currently has to face. These excessive regulations strangle manufacturing business owners, and make it so that aspiring business owners would rather set up shop overseas than have to deal with them all.
How Can We Fix Things?
In the interview with Steele & Ungar, Drew brings up an important point: “We need regulations. Regulations are very important—we have to have clean water, clean air, and we’ve got to protect our worker’s safety. Those things are obvious.”
The issue is that only a small percentage of the regulations manufacturers face actively contribute in meaningful ways to the above goals. Many of the existing regulations are redundant and only serve to introduce more paperwork to report to some agency that Regulation X571-A has been fulfilled.
If form A, B, and C all serve to verify compliance with the same goal, why do we have three forms instead of one simplified form? The irony here is that we are killing trees to make paperwork to say that we’re protecting the environment.
Regulatory bloat doesn’t serve anyone but the regulators. It gives them a reason to have more regulators and generate fines.
What we, as a country, need to do is streamline the regulations that we have. Take the regulators that are currently enforcing these redundant regulations and have them identify the ones we could do without. We don’t need to do away with regulation, just make sure that the regulations we have are sensible.
Everyone can agree that we need clean water, clean air, and safe work environments. But, over-regulation doesn’t ensure these things. Over-regulation just drives business owners to shift their companies to other regions where they’re able to operate with fewer burdens.
For example, Marlin Steel often takes jobs where the wire forms need to be chromed. Marlin used to use businesses in the Chesapeake Bay area for this, but they all went out of business or moved operations elsewhere because of overly-aggressive regulations. These regulations are so aggressive that the New York State-based companies that Marlin now uses have effluent coming out of their chroming processes that’s cleaner than the tap water going into the process!
By cutting out all of the redundant regulations and nonsensical paperwork, small and midsize manufacturers can save tens of thousands of dollars per employee—allowing them to invest more in training, equipment, and employee pay to get better results and grow the American economy.
We need regulations to protect people and the environment, but those regulations need to be sensible and easy to follow—not obtuse and burdensome.