Opinion poll: Anti-regulatory 'hype' unwarranted

Rival small-business boosters, Obama foes disagree

One advocacy group has published a survey it says proves that US small-business owners aren't unduly concerned with government regulations. Another group says that the first group's opinion poll is tainted by bogosity.

"The rhetoric out there blaming government for the lack of small-business growth has reached a fever pitch," said John Arensmeyer, founder and CEO of Small Business Majority, which released an opinion survey entitled "Small Business Owners' Opinions on Regulations and Job Creation". Arensmeyer's remarks came in a call with reporters when announcing the survey results this Wednesday.

From Arensmeyer's point of view, his survey proves that "The facts about how small businesses feel about regulations are way different from the hype that's out there."

"The polling shows that small businesses recognize the importance of regulations in a modern economy, and that in fact that really weak demand and a lack of customers is the biggest problem facing small businesses right now," Arensmeyer said.

The polling that he cites was undertaken in a survey of 500 small-business owners across the US, commissioned by the American Sustainable Business Council and the Main Street Alliance, along with Arensmeyer's Small Business Majority, and conducted by Lake Research Partners.

Of the respondents, 50 per cent self-identified as Republicans, 32 per cent as Democrats, and 15 per cent as Independents. Whether that remaining three per cent identified as Whigs, Know-Nothings, or members of the Bull Moose Party is not known.

Thirty-four per cent of respondents cited weak demand for their product or services as the biggest problem faced by their business, Arensmeyer said. Fifteen per cent cited the cost of health coverage and other benefits, and just 14 per cent said their biggest problem was government regulation.

On the other hand...

Cynthia Magnuson, a spokeswoman for another advocacy group, the National Federation of Independent Business (NFIB), told The Reg in an email that she takes issue with the Small Business Majority survey. One of the problems she cited was that 29 per cent of the small-business owners who reponded to the survey were sole proprieters – they didn't employ anyone.

"For many of these tiny businesses, many regulations don't apply – like labor regulations, which are very costly and incredibly onerous for small businesses," said Magnuson. "So the sample is skewed."

Last year, the NFIB published its own survey, the "The National Small Business Poll", which focused on small-business growth. As Magnuson explained, that survey discovered that that regulatory matters as a whole stifle growth. "The regulatory thicket is a greater impediment to growth for those citing law/regulatory issues than is a specific regulation or set of them."

Of the repondents to the NFIB survey who cited legal or regulatory impediments to growth, 63 per cent of that group – 31 per cent of all those surveyed – had a current investment or project impacted by regulatory matter, with one quarter of them either cancelling a recent project or abandoning investment and/or project plans.

That said, the NFIB's survey does agree with the Small Business Majoity's survey in one important finding: "NFIB does not dispute that poor sales is currently the greatest concern for small-business owners," Magnuson told us. "In fact, our own research has been suggesting this for years. However, regulations are typically the third greatest concern identified by small-business owners."

But Arensmeyer's study is flawed, Magnuson said. "What the Small Business Majority study ... does not do is address costs. This is an extremely important (and strategic) omission."

Magnuson cited a 2010 study by the US Small Business Administration (SBA), which found that on a per-employee basis it costs small firms with less than 20 employees $2,830 more than those with 500 or more employees to comply with government regulations.

The SBA declined to comment on the Small Business Majority study for this article, and the staunchly antiregulatory business group, the US Chamber of Commerce, did not respond to our request for comment.

Arensmeyer's study also reflects small-business owners' concern over the SBA findings on regulator impact on small versus large businesses. Seventy-eight per cent of respondents to the Small Business Majority study said some regulations are important to protect small businesses from unfair competition and to level the playing field with big businesses.

Magnuson also took issue with the Small Business Majority's statement that "Small business owners support clean energy policies," based on their finding that 79 per cent of its respondents support clean air and water. Few would answer with a strong negative to the phrasing of the survey's question, she said, which asked respondents to rate the importance of "Having clean air and water in your community, to keep your family, employees and customers healthy."

Speaking of 'hype' and 'fever pitch'...

The argument over federal regulation of US businesses is sure to heat up during the US presidential race, but will likely generate more heat than light on the question. Republican front-runner Mitt Romney, for example, stated in his views on regulation that "A major part of the problem over successive presidencies, and one that the Obama administration has sharply exacerbated, is the regulatory burden on the economy."

Election politics being studded with overstatement, he promised that "A Romney administration will act swiftly to tear down the vast edifice of regulations the Obama administration has imposed on the economy."

Another Republican presidential-candidate wannabe, Newt Gingrich, is also no friend of regulation. As noted by the self-described "regulatory reform and deregulation" champion, the Club for Growth, "There’s a long list of big government regulations that Gingrich has opposed. Commendably, he advocates full repeal of Sarbanes-Oxley. He vocally opposed ObamaCare and favors repeal. He supports lifting restrictions on energy production like offshore drilling, drilling in the Arctic National Wildlife Refuge, and nuclear plant construction."

Gingrich's own website argues that "Job-killing EPA regulations make it difficult for American farmers to earn a living, and the new threats to regulate carbon emissions under the Clean Air Act are downright destructive."

On the other hand, Barack Obama cites some increased regulations as achievements. The Wall Street Reform and Consumer Protection Act, he says will "hold Wall Street accountable and end taxpayer-funded bailouts," and the Consumer Financial Protection Bureau "will protect consumers from unfair financial practices and make sure that credit card companies and mortgage and payday lenders have to follow the rules."

Expect a broad range of reasonable discussion, poll-based disputes, overheated rhetoric, and flat-out mendacity as the argument over the federal government's regulatory policies for both small and large businesses escalates during the run-up to Tuesday, November 6, 2012 – and, of course, well beyond. ®

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