Small firms say regulation is fastest-growing concern

It’s been exactly three and a half years since Barack Obama was inaugurated, and here are two things that folks on the left have been saying about the economy every day since then: It’s Bush’s fault, and the problem is a lack of aggregate demand.

Here’s what small businesses have to say about the situation:

Chart by Dan Clifton at Strategas Research, via the AEIdeas blog

Chart by Dan Clifton at Strategas Research, via the AEIdeas blog

Keeping in mind that these are what small firms are “most concerned” about, meaning many likely have concerns to varying degrees about all three, a few things jump out at me:

1. In 2005, these three concerns accounted for a little more than one-third of small firms’ biggest worries. Today, they combine for about 60 percent. That suggests to me that these firms have less time and energy to devote to specific concerns about growing their business.

2. After shooting to the top in the second half of 2008, concerns about sales plateaued for about two years. Those concerns have been falling pretty steadily for the past year and a half.

3. Concerns about regulation, which more or less mirrored those about sales from 2005 to the start of 2008, began a steady ascent in 2009 and have almost doubled since then.

4. Concerns about taxes have remained fairly steady over these years.

5. At the beginning of 2009, the sum of concerns about regulation and those about sales was in the neighborhood of 40 percent — pretty much the same as today. But the division between them is starkly different: Whereas there were three small firms concerned about sales for every one worried about regulation then, now the two are dead even. In other words, worries about sales have been gradually replaced by worries about regulation.

6. If current trend lines continue, both taxes and regulation will soon rank higher among small firms’ concerns than sales.

Even if one wants to credit Obama’s “stimulus” package with the decrease in worries about sales — totally ignoring the effects of the Federal Reserve’s ultra-loose monetary policy — this graph clearly shows why improved demand hasn’t shifted the economy out of neutral: Increased regulation has stifled the recovery we might have had.

Small firms are generally credited with the bulk of job creation in this country. So the question this information puts to voters is: Which candidate do you expect to do more about the most pressing problems faced by small firms — Barack Obama or Mitt Romney?

– By Kyle Wingfield

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575 comments Add your comment

@@

July 20th, 2012
11:30 am

Well, Kyle. Since Obama built those businesses, shouldn’t he be able to regulate them? The man has to have something to do.

Is it true that he hasn’t met with his Jobs Council…Committee…whatever…in six months? Does he find jobs to be a boring topic or what?

JDW

July 20th, 2012
11:33 am

@Kyle….

Of course you are ignoring the fact that the performance of the current administration is far better than it’s Republican predecessors…

“The last three years of the Bush administration saw higher regulatory costs than the first three years of the Obama administration. If you’re looking for the year with the highest regulatory costs on record, you’ll have to go all the way back to 1992, under President George H.W. Bush.”

-Cass Sunstein, March 19, 2012

Fact Check agreed

http://www.washingtonpost.com/blogs/fact-checker/post/who-issued-more-regulations–obama-or-bush/2012/03/22/gIQAVvGYWS_blog.html

Lil' Barry Bailout - Vote American

July 20th, 2012
11:33 am

Prediction: The libtards ignore the evidence and blame lack of a second Obozo stimulus and “corporate greed”.

Tiberius - pulling the tail of the left AND right when needed

July 20th, 2012
11:35 am

When you have the uncertainty of Obamacare looming, the always unaccommodating EPA, and the ever-present pressure of the IRS, there’s no doubt why this so-called “recovery” is as weak as it is.

It’s been three years since he promised to get rid of regulations that stifled growth, and they haven’t even come up with recommendations as yet.

Maybe the committee meets as often as his Jobs Council, which has been – zero – times since it was formed.

md

July 20th, 2012
11:35 am

They should be worried about those roads that aren’t built yet……we all know those roads are the reason a small business succeeds………

Jeffrey

July 20th, 2012
11:46 am

This is like chicken little. I’ve said it before and I’ll say it again, this is an unfounded fear. I don’t understand how a business owner can be confident enough to run their own business yet be so afraid of this bogeyman. The amount of change that small business has had to deal with over the last few years was more the cause of the private sector than govt ever could be. If a business can survive 08 these regulatiions are the gnat on the belly of an elephant. Stop being scared businesses and go back to worrying about sales, it’s healthier.

BW

July 20th, 2012
11:52 am

Wow…Kyle this is a reach. This is in generalities…which business are we discussing? Which regulations are we discussing? How does the torrent of new regulations affect these business? Are you saying lower demand in the face of the recession and the fact that people are deleveraging have nothing to do with low sales? I simply don’t believe that wiping the books clean of any regulatory actions will make up for the fact that people just don’t have the money.

BW

July 20th, 2012
11:53 am

Kyle

What’s a libtard?

Tiberius - pulling the tail of the left AND right when needed

July 20th, 2012
11:53 am

(Sigh) Another comment from JDW. Another miss.

The Washington Post conveniently (as usual) forgets who was running Congress during 2 of the last 3 years of the Bush Administration (not defending Bush at all, but providing CONTEXT behind the naked facts stated).

Further, the Post goes on to say: “Still, it’s worth noting that the number of “economically significant” regulations — meaning those that are expected to have a positive or negative impact on the economy of at least $100 million — has increased from 126 during Bush’s last three years to 177 during Obama’s first three.”

And just how many regulations from the Federal government ever reach the “positive effect” threshold?

Once again, there are lies, damned lies, and statistics.

Slick Rick

July 20th, 2012
11:55 am

Yes, Kyle, we get it: Obama bad, Romney good; government bad, private enterprise good; regulation bad, no regulation good.

When will you grow up and (a) realize that reality is exactly the opposite of what you believe and (b) start write about something other than the same inane talking points you hear from Rush your hero?

ByteMe

July 20th, 2012
11:56 am

Kyle didn’t do his homework.

He substitutes a survey of NFIB members with the generic “small businesses”. NFIB is an advocacy group for Republicans (just check out their endorsements). Surveying their members is like surveying NRA members to find out that gun control laws are too strict. They drank the Kool-Aid already.

I have several small businesses (including one that’s regulated as a “hotel”). Never have I thought that “regulations” are the issue that keep me from growing and expanding my business. Available credit, decent employees, and even this quaint concept of “24 hours in a day” are my biggest concerns. Regulations are so far down the list.

#FAIL

Tiberius - pulling the tail of the left AND right when needed

July 20th, 2012
11:56 am

“What’s a libtard?”

Anybody who would write nonsense like what you wrote below, BW.

“I simply don’t believe that wiping the books clean of any regulatory actions will make up for the fact that people just don’t have the money.”

You see, NO ONE has called for “wiping the books clean” on regulatory actions.

NO ONE.

ByteMe

July 20th, 2012
11:57 am

What’s a libtard?

A word made up by a middle schooler whose mother doesn’t know what he’s doing right now with his right hand in the basement of their home.

Tiberius - pulling the tail of the left AND right when needed

July 20th, 2012
12:00 pm

“NFIB is an advocacy group for Republicans (just check out their endorsements).”

Maybe they’re that way because they know who is actually responsible for building their businesses, ByteMe?

BW

July 20th, 2012
12:03 pm

Tiberius

Not one person has actually said which SPECIFIC regulation(s) is causing so much pain….just the threat of regulation. My point still stands…if people aren’t buying your stuff I don’t care how many regulations are or are not on the books, you’re done….the worry should be on why your business model cannot draw in enough revenue as opposed to non-specific regulations that may or may not even affect you.

Kyle Wingfield

July 20th, 2012
12:06 pm

BW @ 11:52: “wiping the books clean of any regulatory actions”

Talk about generalities…

Bucky

July 20th, 2012
12:06 pm

I know it is now a major chain, but Chick-fil-A was once a small business was BORN in Atlanta.

On a side note, I normally go to Chick-fil-a every Friday for 2 Chick-fil-A Sandwiches.

However, this Friday, in light of CFA’s very public & controversial political statement this week, I will be ordering 3 Chick-fil-A sandwiches instead.

I hope 0bammy’s Administration doesn’t come after you for sticking up for your beliefs.

You Rock, Cathy Family!

SBinF

July 20th, 2012
12:06 pm

Awesome,

My top concern is that tomorrow aliens will appear on earth in battleships and rain destruction on humanity.

Why isn’t that news?

Kyle Wingfield

July 20th, 2012
12:08 pm

Slick Rick @ 11:55: ICYMI, I didn’t answer this survey; people who run small businesses do. Perhaps you’d like to explain to them why the challenges they see for their businesses are not “reality.”

BW

July 20th, 2012
12:08 pm

Kyle

Nice deflection!

Bucky

July 20th, 2012
12:08 pm

The Federal Government now too big and too powerful, and it needs to stay the [Heck] out of our private lives.

I haven’t had a VARSITY chili dog in some time.

I wonder how the family who owns THE VARSITY feels (publicly) about same-gender “unions.”

Kyle Wingfield

July 20th, 2012
12:10 pm

ByteMe @ 11:56: So you must be among the ones who don’t cite regulation as your top concern. I’m not sure how that invalidates the ones who said it is theirs.

If you want to disregard anything you see from a source you disagree with, that’s your prerogative.

@@

July 20th, 2012
12:11 pm

the worry should be on why your business model cannot draw in enough revenue

Could be because so many people are unemployed?

ByteMe

July 20th, 2012
12:11 pm

Maybe they’re that way because they know who is actually responsible for building their businesses, ByteMe?

HAHAHAHAHAHAHAHAHAHAHAHAHA

:lol:

After I stop laughing, I’ll really start feeling bad for you.

Kyle Wingfield

July 20th, 2012
12:13 pm

BW: Deflection? No, I’m pointing out your mischaracterization of the argument. I know of no one who wants to “wipe the books clean of any regulatory actions.”

Btw, now is as good a time as any to point out that small firms are particularly sensitive to regulation because larger firms often team up with government to create regulations whose primary effect is to raise the barriers to entry for smaller competitors. So this is not necessarily about being “pro-business” but “pro-market.” And, yes, far too many Republicans fail to understand that distinction.

BW

July 20th, 2012
12:14 pm

@@

No that’s non-sense according to small businesses in this survey….it’s all taxes and regulation….yep that’s it (wish I knew how to do the rolling eyes emoticon)

Jeffrey

July 20th, 2012
12:14 pm

I am trying to thank byteme for his comment on the nfib. Why are they not showing up?

ByteMe

July 20th, 2012
12:15 pm

ByteMe @ 11:56: So you must be among the ones who don’t cite regulation as your top concern. I’m not sure how that invalidates the ones who said it is theirs.

So let me be clearer for you so you can’t deflect: you start with a limited set already being fed propaganda about all the things that are wrong for the people who are on “your side” and then ask them what they think is wrong and I’ll bet you end up with exactly what you fed them.

And you bought it.

I don’t disregard it for what it is. But then again, I also don’t puff it up to believe it’s a sample of ALL small businesses the way you tried to.

Now if you want to change your text it to reflect that the sample of small businesses comes exclusively from NFIB members, then I’ll be happy not to bat the ball around and accept it for what it is. But puff it up to mean more than it is supposed to mean and you get a #FAIL.

Tiberius - pulling the tail of the left AND right when needed

July 20th, 2012
12:15 pm

BW, in case you missed it, we’re in either a recession or a weak recovery. Sales will ALWAYS be down due to that economic condition alone.

However, the COST of regulations keeps companies from providing goods at a lower cost to consumers, making it even harder for those without much money to purchase things.

Cause and effect, BW.

Lil' Barry Bailout - Vote American

July 20th, 2012
12:17 pm

Kyle’s post isn’t about why Obozo’s economic recovery is so pathetic. It’s about the most significant problems facing small business. If you want to make small business more successful, you might pay attention to what real Americans who work in the real economy are saying, and not what Obozo and his sycophants are chanting.

ByteMe

July 20th, 2012
12:18 pm

Another way to think about this: if Bush generated more regulations than Obama why did concern over regulations start to increase when Obama took office? Could it be… Satan?

BW

July 20th, 2012
12:19 pm

Kyle

Thanks for pointing out that large business want to make it difficult for small businesses. In regards to my mischaracterization as you say…the point I’m making is that regulation has nothing to do with the reason alot of these small businesses may be struggling, it’s revenue plain and simple. Even the most die-hard partisan has to acknowledge the probability of keeping a business open and profitable has always been low even in good times. Let stop talking generally as if every small business has a model for sustained success and start talking about the specific regulations that are hindering profitability.

JamVet

July 20th, 2012
12:20 pm

Libtard?

That’s easy.

It is a term favored by juvenile delinquents with fifth grade vocabularies…

BW

July 20th, 2012
12:20 pm

Tiberius

Thank you for explaining why outsourcing continues unabated. If this is simply about the bottom dollar, American workers are too expensive to compete in ALOT of areas.

Hillbilly D

July 20th, 2012
12:23 pm

Personally, I think there should be more color contrast in the graph. Blue and black are to close together.

jd

July 20th, 2012
12:25 pm

How are the questions worded? What is the sample frame (i.e. what is a small firm?; what are the demographics of the respondents?) What are the std deviations for those questions — a 5 pt rise may be insignificant… I need evidence to make a decision — not more spin.

Filter

July 20th, 2012
12:26 pm

Serious question.

I have heard a lot of talk about “regulations” and how they are strangling the economy.

Can someone give me a list of say, about 10 regulations that are actively strangling small business.

ByteMe

July 20th, 2012
12:26 pm

Black? That’s only used in the axis and legend. I see graph lines that are blue/green/red…?

ByteMe

July 20th, 2012
12:27 pm

Can someone give me a list of say, about 10 regulations that are actively strangling small business.

And no fair complaining about a state regulation if the Republicans control your statewide offices. :)

@@

July 20th, 2012
12:28 pm

BW:

Since you weren’t buying what small businesses were selling, I just wanted to offer you another option.

ByteMe

July 20th, 2012
12:28 pm

How are the questions worded? What is the sample frame (i.e. what is a small firm?; what are the demographics of the respondents?)

Best you’ll get is to go to the NFIB site and look at the national press release about the survey. Sometime around May 23, 2012 I think.

dc

July 20th, 2012
12:29 pm

And as a result of this and other govt pressures against small businesses, we have had for the past 4 years absolutely no job growth. But let’s ignore that, and continue to pursue the same heavy handed govt control and increase in regulation and tax/cost burden.

For you folks who are out of work out there….how’s that approach working for you?

Tiberius - pulling the tail of the left AND right when needed

July 20th, 2012
12:29 pm

“Can someone give me a list of say, about 10 regulations that are actively strangling small business.”

Ask Obama. He’s been studying them for that last three years in between vacations, golf, and fundraising.

Filter

July 20th, 2012
12:29 pm

Also, is anyone aware of how this survey was done, the methodology behind it.

Was it an open survey asking an open question such as “what are your greatest concerns going forward” or a closed survey with options given to rank?

Hillbilly D

July 20th, 2012
12:31 pm

Btw, now is as good a time as any to point out that small firms are particularly sensitive to regulation because larger firms often team up with government to create regulations whose primary effect is to raise the barriers to entry for smaller competitors.

That’s a good point. It’s always amazed me that some small business people walk in lockstep with whatever large business people are pushing. They’re following the very people who are trying to put them out of business. I think for the large business people it’s often a bit of “please don’t throw me in the briar patch”.

Filter

July 20th, 2012
12:31 pm

Tiberious,

That really didn’t address my question, now did it?

@@

July 20th, 2012
12:31 pm

AmVet:

It is a term favored by juvenile delinquents with fifth grade vocabularies…

I know you dream of being a regulator, but try and focus, will you? The topic is regulations on small business, not your regulations on other bloggers.

You’re welcome.

Two Riders Were Approaching

July 20th, 2012
12:32 pm

I hear this meme repeated constantly on Fox but is argument always seems to lack specific regulations. Can someone enlighten?

Don't Tread

July 20th, 2012
12:34 pm

Did they ask other questions or just offer these three choices when they did the poll?

On the issue of regulation, it’s really hard to plan 5-10 years out when you don’t know what 0bama’s going to come up with next (and implement tomorrow via executive order), or which laws will be enforced and whch others won’t.

The data presented reinforces the idea that uncertainty is a job killer. (But hey, the government made you successful, right? Just leave it to them, we’ll all be singing kum-ba-ya when they fix it.)

Poor Boy from Alabama

July 20th, 2012
12:35 pm

The costs of federal regulatory compliance are a real issue for small business. They amounted to $10,585 per employee as of 2008 according to the Small Business Administration

archive.sba.gov/advo/research/rs371tot.pdf

See Table 1, page 13 for details.

Against that backdrop, all the new regulations that have been added in recent years only make it more costly and more difficult to operate a small business. These new regulations also make it more expensive to employ workers. Neither is a good thing.

The rate of new business formation has declined in recent years according to US Census data, as reported by the Kauffman Foundation:

kauffman.org/newsroom/number-of-firms-continues-to-slide-according-to-new-census-bureau-data.aspx

Slowdown in number of new companies and job creation from startups and young firms makes a robust recovery harder to achieve and sustain

(KANSAS CITY, Mo.), May 2, 2012 – Building on a long-term trend, the nation’s business startup rate fell below 8 percent for the first time in 2010, marking the lowest point on record for new firm births. New firms as a percentage of all firms continued a steady downward trend in 2010 – going from a high of 13 percent (as a percentage of all firms) in the 1980s to just under 11 percent in 2006 before making a steep decline to the 8 percent in 2010 – the most current year of data available.

The NFIB data is another indication that we’ve got a tax and regulatory environment that’s not good for small business. Our leaders should put their politics aside and work towards making America a better place to do business.

BTW: I’d offer working links to the references above but this blog put me in moderation when I tried that before.