Small business polls reject anti-regulation rhetoric

The Hill’s Congress Blog
February 1, 2012

By Frank Knapp, Jr.

With Congress back in session, the Senate will have several bills to consider that seek to make it nearly impossible for federal agencies to implement regulations. The REINS Act, the Regulatory Flexibility Improvements Act and the Regulatory Accountability Act have already passed in the House.

Advocates for these radical measures claim they are primarily needed because regulations are the top reason for small businesses not hiring. But a new nationwide poll of small business owners released today adds to numerous other surveys that refute this position.

The poll conducted by Lake Research for three national business organizations – American Sustainable Business Alliance, Main Street Alliance and Small Business Majority – found that the top problem for small business was weak customer demand, not regulations. In fact, reducing regulations came in fifth when small business owners were asked what needed to be done to create jobs. Eliminating incentives for employers to move jobs overseas came in first.

Contrary to anti-regulations rhetoric, 78 percent of small business owners see government standards as an important tool to level the playing field with big business and 86 percent view regulations as a necessary component of a modern economy: 93 percent agreed that their business could live with fair regulations and 78 percent agree that some standards are important to protect small businesses from unfair competition. Moreover, 76 percent said that regulations on the books should be enforced.
Small business owners express strong support for specific rules and standards:

•    84 percent support food safety standards
•    80 percent support product safety standards
•    80 percent support disclosure and regulation of toxic materials
•    79 percent support ensuring clean air and water
•    78 percent support rules to prevent health insurance companies from increasing rates     excessively
•    67 percent support rules to curtail financial speculation by Wall Street and banks.
•    61 percent support moving the country towards energy efficiency and clean energy.

There was much evidence of the same results to the “customer demand versus regulations” debate in 2011:

•    McClatchy News Service reported in September 2011 that they surveyed owners of small businesses, many of them mom-and-pop operations, to find out whether they thought they were being “choked by regulation.” Not one of the owners complained about regulation in their industries, “and most seemed to welcome it,” McClatchy reported.

•    In November 2011 the Hartford Financial Services Group reported that its survey of 2000 small businesses found that 75 percent of the respondents were struggling to succeed. The biggest barriers to their success were identified as lack of customer demand.

•    The National Federation of Independent Businesses survey of small business (conducted annually) reported that when asked what their most important problem is, almost 30 percent of small businesses reported “poor sales”; less than 14 percent reported regulation.

•    In May 2011, the U.S. Chamber of Commerce released a poll of small businesses, members and non-members. When asked what the top obstacle to hiring new employees was, only 8 percent said “too much regulation.”

Even an October Gallup poll being touted in the House Committee on Small Business hearing today as showing regulations as the top concern of small businesses actually, with more unbiased analysis, shows that the lack of customer demand is by far the number one issue of small business.

A recent big business survey shows similar results. The Business Roundtable reported last month that the main reasons for two-thirds of the biggest U.S. companies not planning on hiring in the next six months are this country’s “sluggish growth” and Europe’s economic problems. This result corresponds to the U.S. Bureau of Labor Statistics report that 30 percent of layoffs in the first half of 2011, according to the businesses themselves, were due to lack of business demand. Less than 1 percent of the layoffs were attributed to government regulations.

So if small businesses aren’t self-identifying regulations as their top impediment to growth and big businesses in general are not citing regulations for holding back hiring, who are the pushers of the anti-regulation bills really representing?

The answer is clear. Most of the complaints we hear in Washington are from only two industries — those impacted by Wall Street reform (Dodd-Frank) and new Environmental Protection Agency regulations. K Street lobbyists regale Congress and the public about the dire economic consequences to small businesses of regulations that will prevent another Great Recession or protect the health and safety of our citizens. In reality, the financial giants who drove our economy off a cliff and the powerful oil/coal industries (and the surrogates of both) are driving the anti-regulation train in the name of small businesses.

The truth is that small business owners favor regulations to protect the air, water, food, financial system and themselves (from big business). Wall Street and the oil and coal lobbies should stop using small business as an excuse to run roughshod over regulations and take our nation backwards in time to the era before Theodore Roosevelt.

Knapp is the vice-chair of the American Sustainable Business Council and the president/CEO of the South Carolina Small Business Chamber of Commerce.

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