Mississippi’s regulations lead to fewer jobs, more poverty

New data shows that federal regulations have led to more people living in poverty, greater income inequality, fewer businesses, less jobs, and higher prices for consumers in Mississippi.

According to the research from the Mercatus Center at George Mason University, Mississippi has experienced the following regressive effects:

86,135 more people living in poverty

Using the federal regulation and state enterprise (FRASE) index, which “represents the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy,” research shows that a 10 percent increase in the effective federal regulatory burden upon a state is associated with a 2.5 percent increase in the poverty rate.

From 1997 through 2015, regulatory burden in Mississippi increased by 71 percent. That is associated with an increase in the poverty rate of 17.75 percent. In 2018, Mississippi’s poverty rate stood at 19.8 percent. Without the regulatory increase, it would have been 16.82 percent.

That’s the equivalent of 86,135 fewer people living in poverty.

3.6 percent higher income inequality

Using the FARSE index, a 10 percent increase in the regulatory burden is associated with a 0.5 percent increase in the state’s Gini coefficient, the most commonly used measure of income inequality.

Mississippi’s increasing regulatory burden represents a 3.6 percent increase in the level of income inequality.

904 jobs lost annually and 68 fewer businesses annually

Research from the Mercatus Center has found that a 10 percent increase in a state’s regulatory burden is associated with a 0.42 percent reduction in the number of small businesses and 0.55 percent decrease in small business employment.

In 2017, Mississippi had 42,676 small businesses, employing 437,242 workers. Between 1999 and 2015, industry-level federal regulations increase by 3.78 percent each year. This translates to a loss of 68 small businesses and 904 jobs each year. During that time period, it represents about 15,000 jobs lost.

7.35 percent higher prices

Research finds that a 10 percent increase in federal regulations is associated with a 0.9 percent increase in consumer prices. This translates into a 7.35 percent increase in consumer prices from 1999 through 2015.

As the data shows, the need to reduce regulations is not just a good talking point. It will help Mississippians earn more, start more businesses, obtain employment, and pay lower prices for consumer goods. All positive economic measurements.

While Mississippi doesn’t control federal regulations, the state does have 118,000 regulations totaling more than 9.3 million words on the books, all having similar detrimental impacts on the economy. For a couple years, proposals have been introduced that would create pilot programs mandating a reduction in regulations from a handful of agencies.

They have never made it past the finish line.

Similar reductions in the past have been demonstrated effective in other places. In the last decade, lawmakers in British Columbia worked with public sector workers to streamline, reducing regulations by over 40 percent. In Idaho last year, Gov. Brad Little led an effort to repeal the entire regulatory code and replace it with a smaller package.

This would be a positive first step for the state, helping the most regulated state in the Southeast finally experience the economic growth of our Southern neighbors.

Mississippi has tackled regulations in previous years. In 2004, the legislature freed hair braiders to work after a lawsuit was filed by Melony Armstrong and Institute for Justice. Today, more than 4,000 hair braiders are working in Mississippi. Meanwhile, zero complaints have been filed.

With a new session ahead, now is the time to tackle a need that isn’t going away.