Study: Increased Regulation Hits Low-Income Americans the Hardest

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Posted by James Morrone Jr on Wednesday, March 2nd, 2016, 9:10 AM PERMALINK


Anyone with a basic understanding of economics understands that high compliance costs associated with an increased regulatory burden in an economy are passed down to consumers. A recent study by the Mercatus Center at George Mason University further proves this basic tenant of economics, by thoroughly explaining the correlation between vast amounts of regulation and the increased costs placed on consumers. The study points out that continued over-regulation at the hands of the government only adds another burden on the backs of hardworking Americans. 

In the last 15 years, the regulatory burden put in place by the federal government has jumped to 28 percent. To put this in perspective, with every 10 percent of additional regulation forced, consumer prices increase by almost 1 percent. In the last 15 years alone, this increased interference has caused American households, and not necessarily those the regulation is aimed at, to bear the burden of excessive government interference. 

According to the study, low-income families are disproportionately burdened by the regressive effects of increased regulations, causing further distress on family budgets that are already stretched thin. 

For example, when compared to high-income households, low-income households spend at least 15 percent more of their budget on everyday goods and necessities. Also, as a result of increased regulations, “the poorest incomes groups experience both the highest overall levels of inflation and the highest levels of price volatility.” As such, increased regulation will cost them more and more, and continue to keep many hard working Americans from raising themselves out of poverty. 

Despite the claims of some pro-regulatory politicians, increasing regulations are not an attempt to protect low-income households, but an attempt to increase the control the federal government has over the economy.    

Photo Credit: 
Axel Drainville

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