"My colleague Wayne Crews has surveyed the growth of the regulatory state every year since 1996 in his annual report, Ten Thousand Commandments. In that time, he has seen the number of pages in the Federal Register grow from 67,000 to 81,405. Each page (apart from the bizarre blank ones) contains a rule that imposes costs on businesses while creating more jobs for bureaucrats. Small businesses suffer disproportionately from these rules because their owners have to deal with compliance themselves (they usually give up and hire someone else to handle it when they reach about 30 employees). The costs of complying with regulations average $10,585 per employee, the SBA says—enough to throw a small firm of 20 employees with $200,000 in profits into just-breaking-even territory.

No wonder small businesses, the engine of the U.S. economy, have stalled in hiring. Chamber of Commerce surveys show that over 60 percent of small businesses have no plans to hire in the next year, and the firms cite greater regulation or the threat of it as a major reason for their reluctance. In short, bureaucracy helps explain why businesses are making profits but not jobs. Substantially reducing the regulatory burden would go some way toward getting them to hire again."