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Regulatory State Threatens Jobs, Wages and Startups

The negative impacts of federal regulations on jobs, wages and innovation was the subject this week of hearings before the House Judiciary Committee. Rep. Darrell Issa (R-CA 49) opened the hearing before the subcommittee on regulatory reform by noting that many in Washington consider the “endless expanding web of intricate [federal] rules” to be natural or desirable. “No one they know is going to lose a job because of overregulation,” he added.

Federal bureaucrats live “within the DC bubble” and “often do not meet with industry representatives,” Rep. Issa explained, noting that only 25% of regulatory agencies even take employment effects into account. On top of that long-standing problem, we have “the current Administration’s fanatic commitment to increased regulations even as the recovery remains shaky,” Issa said.

The cost of this disconnect is staggering. “Each year since 2008, regulators have added more than $100 billion in new regulatory costs,” Issa explained, noting that the burdens often fall disproportionately on the poor and minorities. For example, a “National Black Chamber of Commerce study found that the EPA’s proposed Clean Power Plan rule would impose severe and disproportionate economic burdens on poor families, especially minorities.”

Rep. Issa also refuted the argument commonly made by bureaucrats and defenders of big government that hiring new workers to carry out or monitor compliance with the demands of the regulatory state spurs economic growth. “Regulatory compliance jobs don’t boost productivity,” Issa said. “You never get a faster horse by putting more people on its back.”

In addition to several policy experts on the left and right, the witnesses at the hearing included Ryan Murray, an executive at a coal mining company, and Janet Whitacre-Kaboth, the president of a small company that manufactures clay products. Ms. Whitacre-Kaboth testified about the crippling impact of two regulations on the U.S. brick industry: an Environmental Protection Agency (EPA) brick rule and an Occupational Safety and Health Administration (OSHA) regulation—soon to be tightened— that governs permissible exposure to silica. She pointed out that “regulations developed using a ‘one size fits all’ model are a big problem” and that agencies “need to understand the local impacts of their rule on real people whose real lives may be ruined by losing their job.”