How Florida Promoted Job Growth By Cutting Red Tape
Introduction
Today, over 95 million U.S. adults are not working or looking for work. Hovering under 63 percent, the labor force participation rate is at its lowest level since the large-scale movement of women into the workforce in the late 1970s. But as the share of Americans working has declined steadily, the number of Americans who are dependent on welfare has increased sharply. The number of people dependent on Medicaid has more than doubled over the last 15 years, reaching 75 million people in 2016. Likewise, food stamps enrollment has grown by more than 150 percent during that same time, reaching 43 million in 2016. In both programs, able-bodied adults represent the fastest-growing group.
President Ronald Reagan once said that “the best social program is a productive job for anyone who’s willing to work.” His remarks are as true today as they were when delivered in 1982. According to the U.S. Census Bureau, only 2.4 percent of people who work full-time, year- round jobs live in poverty. Even having a part-time job cuts the likelihood of poverty in half. Alternatively, nearly 1 in 3 adult Americans under the age of 65 who did not work over the past year are stuck in poverty. Having a job is the number one predictor of how likely someone is to live in poverty — ahead of family makeup, disability status, race, sex, and education.
Governors across the country understand the many economic and social ills that come with joblessness, so they are following Reagan’s advice and taking job creation seriously. An effective way to encourage job creation is by instituting reforms to the burdensome regulations that stand between those in need and the jobs that will set them on the path to independence. This allows millions of individuals to lift themselves up and reclaim their dignity through work.
When regulations become too numerous and onerous to comply with, job creation suffers. The annual “Small Business Friendliness Survey,” conducted by the Kauffman Foundation and Thumbtack, Inc., consistently finds that small business owners cite compliance with regulatory permits and licenses as a bigger impediment to their success than tax rates. When small businesses prosper, the economy grows. As the 2014 Small Business Friendliness Survey states, “Over 99 percent of U.S. employer firms meet the Small Business Administration’s definition of small businesses, and they account for nearly half of all private sector employees. Over the past two decades, almost two-thirds of net new private sector jobs have come from these small businesses.”
Beyond supporting small businesses, new business formation is vital for economic growth. But the Brookings Institution reports that business startup rates are much lower now than in the 1980s. Here too regulation plays a role. A 2015 study by the Mercatus Center at George Mason University found that year after year of accumulating regulation contributes to the declining number of new businesses and has an even stronger negative effect on hiring.
Even when policymakers realize that regulatory reform is necessary, the task can seem daunting. It is often difficult to figure out where to start and how to identify which regulations need to go. Florida’s experience in reining in bureaucracy, cutting job-killing regulations, and unleashing the private sector provide a replicable strategy for other states seeking to promote economic prosperity.
