COVID-19 has kept many Pennsylvanians from frequenting the neighborhood coffee shops, nail salons, or retailers they once took for granted. But that’s not the real tragedy—even after stay at home orders are lifted and businesses are once again permitted to serve their customers, many of the 1 million small businesses across the commonwealth will have closed.
Small businesses that manage to survive the crisis will still have to face Pennsylvania’s regulatory policies. But we can change that. Lawmakers should use this opportunity to ease the barriers facing entrepreneurs and make it easier for small businesses to rehire and continue serving the needs of their communities.
A new poll from the U.S. Chamber of Commerce and MetLife found that 1 in 4 small businesses are less than two months away from having to close permanently. When applied to Pennsylvania, it would mean 250,000 businesses are 60 days away from failure, and roughly 625,000 additional people are at risk of losing their job.
There is federal aid in the form of cash assistance and small business loans from the Coronavirus Aid Relief, and Economic Security (CARES) Act. Additionally, the state is issuing small business loans from the COVID-19 Working Capital Access Program (CWCA). But even with these loans, if businesses are able to survive the crisis, it will be difficult to thrive as supply chains are disrupted and operations become increasingly difficult. An onerous regulatory system will only add to the new challenges businesses will be forced to navigate.
Even though our system is designed to treat all commerce fairly, regulatory burdens on entrepreneurs at smaller firms are disproportionately high. Small firms absorb a 36% higher cost per employee than large firms.
That’s compounded by the fact that state agencies enforce over 153,000 regulations in Pennslvyania. According to State RegData by the Mercatus Center, the code would take about 18 weeks to read.
While some of these restrictions are justifiable, that isn’t always the case. Researchers at Mercatus discovered that there were over 200 restrictions focused solely on the design and use of ladders. In addition, there were almost 200 rules for packages and containers.
These needless barriers slow economic growth. At the federal level, regulations are estimated to have slowed real GDP growth by 2% a year over the last 70 years. Luckily in Pennsylvania, a group of lawmakers have stepped forward and proposed a series of bills to reduce this burden and help liberate local businesses. These bills were needed prior to the pandemic but now they’re even more essential.
- House Bill 430 (Rep. Kerry Benninghoff) would allow the General Assembly to repeal regulations through a concurrent resolution.
- House Bill 509 (Rep. Greg Rothman) would create an online tracking system for state permits to cut down the countless hours entrepreneurs spend navigating the complex permitting process.
- HB 806 (Rep. Dawn Keefer) would require the General Assembly to approve any economically significant regulation, defined as an impact of $1 million or more per year for the state, municipalities and/or the business community.
- HB 1055 (Rep. Kate Klunk) would create an Office of the Repealer to review or amend current regulations.
According to Freedom in the 50 States from the Cato Institute, Pennsylvania comes in at a disappointing 37th for its regulatory environment. Pennsylvania owes its entrepreneurs more. These bills wait for consideration in the Senate, providing lawmakers the opportunity to lead the way in rebuilding Pennsylvania’s small businesses following COVID-19. They can do that by reducing the regulatory burdens on the entrepreneurs and risk-takers who are so integral to getting us back to work
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