Small Business and Federal Regulation

October 30, 2013
By Kevin Rowe MPP 2014

Anyone who does a Google search of the phrase “regulations are crushing small business” will find plenty of rhetoric on the impacts of government regulations on the U.S. economy. But what is the evidence on these claims? Former Administrator of the Small Business Administration (SBA) and current Institute of Politics Fellow Karen Mills spoke to the rhetoric and the facts on small business and regulatory policy in a conversation with Professor Joe Aldy at the October 24 Regulatory Policy Program Seminar.
Mills dispelled some misconceptions about the federal regulatory burden on small businesses and at the same time acknowledged areas where regulators could do more to facilitate entrepreneurship.
Mills argues much of the bad feeling directed toward federal regulators in the name of small business may be misdirected. According to survey data – permitting procedures, taxes, and complexity rank highest among the regulatory concerns of small business owners, yet as Mills explained, some of these issues are the province of state and local governments.
In other cases, such as that expected under the Affordable Care Act (ACA), the regulatory burden is simply overstated. Ninety-six percent of small businesses will face no requirement to provide insurance to employees under ACA, Mills argued, and only five percent of the remaining four percent of businesses that are large enough to meet the federal threshold are not already providing insurance.
On the other hand, Mills also acknowledged that the multitude and complexity of federal regulations and requirements presents a particular challenge to small businesses. Conflicting regulations and protracted administrative procedures can be make-or-break for new enterprises.
During her tenure, SBA sought to reduce this burden in an effort across federal agencies to provide small businesses with “special flexibility” in complying with regulations. Several regulatory actions taken by SBA focused on reducing the paperwork burden and complexity in the implementation of its programs, such as streamlining the application form for small business loans.
Mills also described the transformative potential of information technology and social media to simplify permitting and other regulatory compliance issues for small businesses.
The Fall 2013 New Directions in Regulation Seminar series is sponsored by the Regulatory Policy Program at the Mossavar-Rahmani Center for Business and Government.

Karen Mills, Institute of Politics fellow

Karen Mills, Institute of Politics fellow
Photo Credit: Victoria Groves

Mills dispelled some misconceptions about the federal regulatory burden on small businesses and at the same time acknowledged areas where regulators could do more to facilitate entrepreneurship.

 


John F. Kennedy School of Government 79 John F. Kennedy Street
Cambridge, MA 02138
617-495-1100 Get Directions Visit Contact Page