NAPLES – Job creation isn’t the only reason policymakers should explore ways to fast-track the creation of start-up businesses in Florida. A new report by the Foundation for Government Accountability (FGA) indicates that bureaucratic red tape delaying start-ups causes big costs to out-of-work Floridians and state and federal taxpayers.
In The Cost of Bureaucratic Delay, FGA economist Joseph Burke, PhD, calculates the fiscal impact of delaying by just one week the creation of Florida start-ups to unemployed workers, and federal, state, county and municipal governments.
For an out-of-work Floridian receiving an unemployment check, a one-week delay costs an average of $900 in net lost wages and benefits. Florida’s 2009 start-ups created 173,236 new jobs. If those new jobs were delayed by just one week, the unemployed workers who would go on to find jobs as a direct result of start-ups would lose a total of more than $155 million in forever lost wages and benefits. That compensation would go a long way toward financial security for out-of-work Florida families. Their economic opportunity is forever lost because of bureaucratic delay.
“Start-ups are the drivers of job creation in Florida, but bureaucratic red tape is delaying start-ups and robbing out-of-work Florida families of good jobs, more pay, and freedom from government dependence,” said FGA Chief Executive Officer Tarren Bragdon.
Lost wages to out-of-work Floridians are not the only result of bureaucratic delay. As a consequence of additional unemployment compensation and forever lost tax revenue, taxpayers also the sting of delay. The report finds that delaying a single start-up just one week costs the state of Florida $288, while a one-week delay to a single start-up costs the federal government $1,393. Delaying all Florida start-ups created in 2009 by just one week cost the state and federal governments about $9.9 million and $47.7 million respectively.
“Promoting start-up creation achieves two critical goals; putting Floridians back to work, and increasing revenue, without tax hikes, to a state and federal government consistently strapped by budget shortfalls,” Bragdon explained. “Start-ups are the key to Florida’s economic recovery. Future policies must reflect this critical point.”
Counties and municipalities also experience costs of delay, but far less than their state and federal counterparts. Delaying a single start-up by one week costs the average county government $51.00 in declining property values and costs the average municipality just $19.00. In total, delaying all 2009 start-ups by one week cost counties only $1.74 million and municipalities only $670,000.
“Regardless of who is to blame for delaying the creation of start-ups, there is a significant ripple effect throughout the entire system. The consequences of red tape and inefficiencies are too great to ignore. Out-of-work Floridians are being robbed of new jobs and greater economic freedom, and cash-strapped governments are losing revenue,” Bragdon said. “We must cut the red tape, get government out of the way, and fast-track the creation of Florida start-ups.”
Chris Cinquemani, Vice President
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