A recent study conducted by the Canadian Federation of Independent Business (CFIB) found that government regulations were the scourge of small businesses on both sides of the U.S.-Canada border.
According to the CFIB, sister organization to the United States' National Federation of Independent Business (NFIB), Canadian businesses pay significantly more in regulatory compliance costs than their U.S. counterparts on a per employee basis for every size of business except those with at least 100 employees. "Costs are high in both countries, with the smallest firms bearing a disproportionate burden of the per-employee costs," said the report. "In Canada, the smallest firms pay five times as much per employee compared to the biggest firms, while in the U.S small firms pay more than three times as much as their largest counterparts."
A Canadian business with fewer than five employees, including the business owner, pays an average of $5,942 per employee per year in compliance costs, whereas a similarly sized U.S. business pays only $4,084. Per employee regulatory costs get lower and lower as business size increases, with a company in Canada employing more than 100 paying only $1,146 per employee per year in regulatory costs, and a similar U.S. company paying $1,278. For the purposes of the study, the U.S. and Canadian dollars were considered to be at parity.
NFIB Senior Vice President for Public Policy Susan Eckerly said that the report confirms "that regulations cost too much ($198 billion in the United States) and disproportionately burden small firms. The study also points out that 31% of business owners in the U.S. and 23% in Canada said they may not have gone into business if they knew beforehand the regulatory burden they would face," she noted, indicating that bureaucratic red tape not only hamstrings existing businesses, but also prevents the formation of new ones.
The full report is available here.
- Jacob Barron, CICP, NACM staff writer