According to research cited by AEI, burdensome government regulations cost businesses with fewer than 20 employees more than $10,000 per employee, on average. The smallest businesses — the ones least able to work the levers of power in Washington and state capitals — are most vulnerable.
Take Zen Magnets, the Colorado-based magnet company. Zen Magnets, led by founder Shihan Qu, fought a years-long battle against the Consumer Product Safety Commission over a product called Neoballs: small, high-powered magnets that you can stack and assemble in an endless variety of shapes. Qu eventually won the struggle, but the fight nearly put him out of business.
Now imagine that scenario playing out thousands of times across the country, every day — because it does. And these state and federal regulations bear a disproportionate amount of responsibility for this sorry state of affairs.
- State and Local Minimum Wage Laws for Tipped Employees
Millions of service industry employees work for tips. Many make surprisingly good money: Bartenders at busy watering holes and servers at high-end restaurants, for instance, can easily pull down $50 per hour or more during peak periods.
So why do some state governments force their employers to pay sky-high regular wages — starting at $15 in many localities? An emerging body of evidence shows that cities and states with high minimum wages for tipped employees bleed restaurant jobs and other service industry gigs, harming younger workers looking for an economic toehold.
- Hours of Service Limits for Truckers
Thanks to burdensome new U.S. Department of Transportation regulations, long-haul truckers must abide by unrealistic hours of service restrictions that result in unnecessary delays and costs. The burden is especially great for owner-operators, who can’t rely on other team members to pick up the slack.
- Overtime Rules for Non-Exempt Employees
While the U.S. Department of Labor’s new overtime rule is in flux thanks to a last-minute intervention from President Trump, existing overtime rules are bad enough. Employers must pay time-and-a-half to millions of non-exempt employees who exceed 40 hours worked in a given week — an unrealistic threshold in an increasingly competitive global economy.
- State Licensing Requirements
Do you really need a license to do hair? Or nails? Or give therapeutic massages?
According to some state licensing authorities, yes. You do. And that’s bad news for tradespeople seeking to parlay their talents into thriving small businesses. Job-killing state licensing requirements force hundreds of independent entrepreneurs out of business every year due to bureaucratic snafus and unfair enforcement priorities.
- Workers’ Compensation and Unemployment Insurance
According to the U.S. Chamber of Commerce, workers’ compensation and unemployment insurance are among the two costliest regulatory requirements for small businesses. Few advocate doing away with workers’ comp and unemployment insurance altogether, but the current employer-funded system places an undue burden on small business owners and lets those who actually use these programs — workers — off the hook.
These aren’t the only six regulations negatively impacting small business owners’ plans to grow, invest, and create jobs. The federal regulatory leviathan comprises millions of pages of printed regulations and untold reams of departmental guidance. As your own business grows, it’s a cinch that you’ll encounter more examples. The question is, who’ll have your back in the fight against burdensome rules that exist only to stifle innovation?