Current and Future Challenges for U.S. Manufacturing

52. Despite Rhetoric, Regulations Are as Burdensome as Ever

More than any other sector, manufacturers bear the highest share of the cost of regulatory compliance. Many regulations have positive benefits for the economy and society; for example, workplace safety and air quality have improved steadily for the past three decades. Yet few understand the cost of these regulations and their impact on companies facing intense global competition with overseas firms that often do not have similar costs.
The expense of complying with federal regulations is steep. Manufacturers spend an estimated $192 billion annually to abide by economic, environmental, and workplace safety regulations and ensure tax compliance—equivalent to an 11 percent “regulatory compliance tax.” As an example, U.S. industry is faced with the highest pollution abatement costs compared with its major trading partners—even higher than the so-called “green economies” of Western Europe. In 2007, U.S. manufacturers spent an estimated 6.2 percent of value-added complying with air and water emissions standards (which are among the strictest in the world), compared with 6 percent in France and Germany, 5.5 percent in Canada, and 3.5 percent in the UK. Regulatory costs impact the global competitiveness of manufacturers, constrain the demand for employees in U.S. facilities, and further encourage firms to locate production abroad.

To Competitiveness


According to the UN, U.S. Manufacturing Slipped to #2


According to the World Bank, U.S and Chinese Manufacturing Are Comparable


Manufacturing's Share Within Countries Declines


Manufacturing Exports Alone Are Not Enough to Sustain U.S. Economic Growth


The U.S. Is the #1 Destination for Foreign Direct Investment


The U.S. Ranks High But Is Not the Easiest Country To Do Business In


Inflation-Adjusted Manufacturing Has Kept Up With the Overall Economy


Measuring the Quantity of Manufacturing GDP Is Distorted by High-Tech


Traditional Manufacturing Has Not Kept Up With Overall Economic Growth


The U.S. Has a Structural Cost Disadvantage


Among 9 Largest Trading Partners, Only France Has Higher Structural Costs Than the U.S


The U.S. Does Not Keep Pace With Falling Corporate Tax Rates


U.S. Healthcare Costs Are Skyrocketing


Commercial Tort Costs Climb Again


Despite Rhetoric, Regulations Are as Burdensome as Ever