Regulatory reform and the U.S. manufacturing sector: the focus is on improving efficiency

Business Economics, Jan, 2006 by Thomas A. Hemphill

________. 2004. Manufacturing in America: A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers. January; Washington, D.C.

Yuskavage, Robert E. and Erich H. Strassner. 2003. "Gross Domestic Product by Industry for 2002." Survey of Current Business. May, pp. 7-14.

Thomas A. Hemphill is assistant professor of strategy, innovation and public policy at the University of Michigan-Flint. He earned his Ph.D. in business administration, with a primary field in strategic management and public policy and a secondary field in technology and innovation policy, from The George Washington University.

(1) As Leonard (2003) found in his study results, external overhead costs (i.e., corporate tax rate, employee benefits, tort costs, natural gas costs, and pollution abatement expenses) add at least 22.4 percent to unit labor costs of U.S. manufacturers (nearly $5.00 per hour worked) relative to their major foreign competitors. Note that this is the relative, not the absolute, burden of external overhead costs.

(2) The U.S. Small Business Administration (2004) submitted 19 of these regulatory reform proposals to reduce the regulatory burden on businesses with fewer than 500 employees.

(3) The U.S. Congress established OIRA under the 1980 Paperwork Reduction Act. In addition to reviewing draft regulations under Executive Order 12886, OIRA reviews collections of information under the Paperwork Reduction Act and develops and oversees the implementation of government-wide policies in the areas of information technology, information policy, privacy, and statistical policy (Office of Management and Budget, 2002). Since Graham's office first requested rules for review (early in the first term of the Bush administration), it has received 576 nominations (mostly from business groups) with federal agencies acting on 135 nominations with proposals or final rules (Skrzycki, 2005a).