Our economy continues to struggle, with unemployment staggeringly high, inflation eating away at the purchasing power of our dollar, and the Misery Index (unemployment plus inflation) at a 28 year high. It’s critical that we understand how important job creation is to our economic stability, as well some of the greatest obstacles preventing the kind of job growth that our economy is capable of.

The total U.S. population is about 312 million people, with a labor force of about 154 million. Of those, 139 million have jobs, leaving 15 million unemployed, with current unemployment rate at 9.1% per the Department of Labor September Jobs Report. The Wall Street Journal estimates that the total unemployment figure is closer to 17% when counting those who have simply given up looking for work, which takes the unemployed count closer to 28 million. High unemployment is not only catastrophic for those unable to find work that want to, but for an economy like ours where 70% of the total GDP (Gross Domestic Product) is based on consumption, from gas, food and housing, to services and products.

According to the Labor Department, over 80% of the jobs in the U.S. are in the private sector, with state, local, and federal government employees making up the remaining 20%. And that’s even with public sector employment increasing 7% since 2000, and the private sector losing 1% during the same period. Economists estimate that 150,000 new jobs need to be created every month just to keep pace with our population growth and the number of new entrants into the job market.

Most critical to the employment landscape are small businesses that employee 500 or fewer employees. According to the Small Business Administration, small businesses represent 99% of all employer firms, employ half of all private sector employees, pay 45% of total U.S. private payroll, generate 80% of new jobs annually, create more than 50% of nonfarm private GDP, comprise 97% of all identified exporters, and produce 26% of the known export value to our GDP.

Since employee costs, which include wages, employer-paid taxes on those wages, and employee benefits including health care, are typically the largest expense item of a small business, businesses are reluctant to add new employees until or unless warranted by market conditions.

Government regulation adds significantly to the costs associated with running a business. Earlier this year the Small Business Administration reported that regulation costs American business $1.75 trillion per year, and costs small businesses as much as $10,585 per employee.

Some regulation is needful to protect consumers, the environment, and workers. But much of it adds needlessly to business costs. According to the Federal Register there are more than 4,200 new regulations in the pipeline. Most of these are being implemented by the federal bureaucracy, and not tied to legislation coming out of congress, and that doesn’t include the 2,000 pages of new regulations imposed by Obamacare. Some of the more inane regulations are coming from the EPA (Environmental Protection Agency) like regulating farm dust as a pollutant, imposing illogically demanding requirements on energy producers, and regulating the manufacturing sector like never before with extreme emission demands. Obama did warn that his policies would make “energy prices skyrocket.” That’s one promise he’s keeping, but regrettably, they are destroying jobs and livelihoods as well.

The Hill reports that new regulations imposed by an out-of-control EPA will “cause economic activity in much of the country would grind to a halt. Construction would slow. Energy prices would rise. Businesses would be unable to expand. Large parts of the country would be off-limits to new industry.” These extreme regulations put our energy producers and small businesses, including farms, at risk of going out of business, or raising costs so much that consumer and producer inflation will go out of sight.

The Manufacturers Alliance/MAPI has estimated the cost could be as high as 7.3 million jobs by 2020 and add $1 trillion in new regulatory costs per year between 2020 and 2030 for just one of those new regulations.

Senator John Barasso of Wyoming said recently, "Our economy is continuing to sink and it's being weighed down by regulations coming out of this administration."

The President’s proposed jobs bill is simply an attempt to throw more money at the unemployment problem. If he was serious about job creation, he would call off the dogs at the EPA and the rest of the alphabet soup of government agencies and start reducing regulation rather than illogically increasing it. Reduction in regulation would cost less and have far more positive affect in job creation than throwing more of our tax money at the problem.

Jobs by small businesses are the backbone to our economic system, and as such, are the key to our economic stability and growth. Government encroachment through increased regulation stymies economic and job growth. If the president was truly interested in creating new jobs, he should first stop his bureaucracy from killing them.

Published – Idaho State Journal, 06/19/11

Economic uncertainty is crippling to all who are caught in its grip. Individual Americans, uncertain about their job security in a “pink slip” environment are not as inclined to spend as they would be with real job security. They are worried about whether they can keep their homes, keep their vehicles, afford college for their kids, and afford health care if an illness was to befall a family member. Since 70% of the economy is driven by the consumer, this is one of the realities restraining the nation’s economy, and the reality most of us face daily.

That uncertainty has a tight grip on the private sector where free enterprise and entrepreneurship turned a third-world economy into the largest in the world in just a few generations. The economic freedom that once beckoned to the world for the astute, creative and talented to come to America, has rapidly dissipated. Regulation and government control over the private sector are on the verge of choking the life out of free enterprise.

And it’s not just future uncertainty over what shoe may drop next squash free enterprise, but more significantly, the uncertainty over what has already happened to the private sector in the past few years. Each year all new policies and regulations, created both by presidential executive order and legislative statute, are filed with the Federal Register. For years the Register has added over 70,000 pages of new regulations each year. Last year set a new watermark of over 81,000 pages of new federal regulations, including over 6,000 pages due to the federal government taking control of healthcare. And that’s just the beginning. Most analysts claim that by the time Obamacare goes into full effect over the next few years, it will be by far the most onerous regulatory boondoggle in history.

FinReg, the mammoth financial regulatory overhaul passed by congress ostensibly to define “too big to fail” and address the financial collapse of 2008, not only failed to resolve the subprime mortgage issue it was supposed to, but it will in the end, add 25,000 pages of new regulations to the Federal Register.

Every regulation created by Washington imposes new requirements and new costs on employers. Health care costs from the partial implementation of Obamacare have already run out of control with most employers facing 30-45% increases in health-care insurance costs as a result. Over 95% of the private sector employers in the country are small businesses with fewer than 500 employees, and are sole proprietorships, or partnerships, structured as limited-liability companies (LLC) or S Corps.

The costs imposed on small businesses by every page of regulation emanating from Washington is debilitating. Winslow Sargeant, chief counsel for advocacy at the U.S. Small Business Administration, recently shared some staggering facts with the Senate Small Business Committee. He testified that costs to meet Environmental Protection Agency rules average $22,000 per employee for a small manufacturing firm. This compares to only $5,000 per employee for the large companies they are trying to compete with. The average cost for all small businesses to meet federal rules is $10,585 per worker. Small businesses face costs of IRS tax regulations that are four times greater per employee than for large companies. For many small businesses, the cost of government regulation is greater than the cost of health-care insurance on a per-employee basis.

In a recent CNBC interview Jack Welch, the former CEO of General Electric, stated the obvious, that the economy will be moribund for the foreseeable future, primarily because of the anti-business regulatory environment fostered by Washington.

At the National Manufacturing Summit in Dalton, Georgia last month, speaker after speaker lamented the uncertainty of doing business in this era of inordinate regulation. Tom Fanning, Chairman and CEO of the Southern Company, said that increasing federal regulation is causing the costs of everything they do to soar. Norman Holmes, President of Southern Gas, said regulatory costs have increased by 40% just in the past few years.

Last week the President’s Jobs and Competitiveness Council wrapped four months of deliberation over how to improve job stability and growth nationally. They were charged to leave "no stone unturned" in the search of ways to boost the country's anemic job growth. Since all the appointees were ideologically of like mind with the administration, the only suggestions they could come up with were more money to retrain workers, more tax dollars retrofitting commercial buildings to boost energy efficiency, and more government loans passed out by the Small BusinessAdministration. This shouldn’t surprise us, as the president himself last week blamed job losses on ATMs! They’re all clueless, it appears.

It’s largely the uncertainty created by expansive government control over every aspect of private sector business operations that’s inhibiting job and economic growth. What a shame Washington is too myopic to see that!