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Regulatory Costs 75% Higher Than Previous Estimates, Study Asserts

By John S. McClenahen U.S. manufacturers spent $28 billion to comply with federal workplace regulations in the year 2000, 75% higher than cost estimates in previous academic and government studies, figures the Arlington, Va.-based Mercatus Center of George Mason University. Its study, conducted in conjunction with the National Assn. of Manufacturers (NAM), put the average firm's compliance cost at $2.2 million -- about $1,700 per employee. At $567 per employee, worker health and safety regulations carried the highest compliance costs, the study reveals. Employee benefit regulations, with a per-worker cost of $468, were the second most costly. "The substantial cost of federal regulations that falls initially on manufacturers is ultimately borne by consumers in the form of price increases, restricted product choices, wage reductions or diminished asset values," says Mark Crain, co-author of the study and an economics professor at George Mason. Results of the study are based on a survey of 100 NAM members having $600 million to $15 billion in annual revenues and seven to 65,400 employees.

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