What are the consequences of federal regulations upon the average person?  

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mwestwood eNotes educator| Certified Educator

Federal regulations are rules and standards that have been adopted by certain administrative agencies; they are not laws, but they certainly have had a considerable impact upon all American citizens. These many regulations are published in the Federal Register which is structured into 50 subject matter titles.

Among the many government regulations, there are those that protect the safety of workers, such as automation hazards and biohazards [Federal Occupational Safety and Health Administration (OSHA) regulations], and others that cover other important facets of life. Environmental regulations ensure that water is cleaner and other natural resources are obtained in ways that are safe to the environment. Still other regulations cover such areas as travel, manufactured products, and banking.

In a report of the top ten industries that are under federal regulation, these are included (Note: The numbers that follow the industry-relevant restrictions provided are divided by 1,000 for ease of reading):

  • Petroleum and coal products manufacturing 25.48
  • Electric power generation, transmission, and distribution 20.96
  • Motor vehicle manufacturing 16.76
  • Nondepository credit intermediation (lending funds raised by credit market borrowing) 16.58
  • Depository credit intermediation (lending funds raised from depositors, credit market borrowing, or the lending of funds or issuance of credit by engaging in mortgage and loan brokerage) 16.03
  • Scheduled air transportation 13.31
  • Commercial Fishing 13.22 
  • Other financial investment activities 12.26
  • Oil and gas extraction 11.95
  • Pharmaceutical and medicine manufacturing 11.51

Data provided by Mercatus Center, George Mason University.

Often the compliance with federal regulations is costly to industries. Such costs may, then, drive up prices for the consumer. Unfortunately, the regulated goods produced by these industries sometimes represent a higher portion of spending in the poorest households so that these households pay a higher percentage of their incomes on such goods than do the rich. (www.mercatus.org/publication/how-do-federal-regulations-affect-consumer-prices-analysis-regressive-effects-regulation)

In addition, federal regulations impact the citizens in other ways. Among these are regulations that pertain to the workplace environment. Another Mercatus study in 2013 revealed that the acceleration in the quantity of federal rules has "hindered the struggling labor market." First of all, regulations add to costs, and these costs, of course, are passed on to consumers. One consequence of added cost is often a reduction in the final amounts of goods and services being purchased and sold. Then, as production is reduced, the need for workers involved in production decreases, and people are laid off or terminated from jobs.

Furthermore, more regulations lead to employees taken from production and placed in jobs that handle compliance issues. This change reduces overall economic efficiency, and people are often laid off. Even if an individual finds new employment, he or she can face significant losses in lifetime earnings: 

This is largely due to skill mismatches between the jobs lost and the new jobs created in the economy. 

A 2015 study found that while existing firms may have benefited from government regulations because new market entrants were deterred, it also revealed that as regulations increased and became complicated, there was a definitive decline in the number of new small businesses, while large firms felt no effect.

Certainly, there are both positive and negative factors that contribute to the making of federal regulations.