American families don’t need abstract economic theory — they are living the reality every day. Groceries cost more, rent stretches paychecks thinner, and wages, while rising on paper, often fail to keep pace with the true cost of living.
The recent Iran conflict spiked gas prices to above $4 a gallon. Beyond inflation and gas prices, another quieter force is shaping these pressures: the weight of America’s regulatory system.
For those less familiar with policy language, the “regulatory system” is simply the web of government rules businesses must follow — costs that are often passed on to consumers through higher prices, fewer job opportunities, and slower wage growth.
DEREGULATE TO MAKE CHILDCARE AFFORDABLE AGAIN
Federal reporting shows at least $15–$20 billion in annual costs from major federal rules alone, while acknowledging this captures only a narrow portion of total regulatory activity. According to data from the White House, regulations can trigger a chain of economic impacts that eventually affect U.S. households and companies. In addition, independent analyses drawing on federal data estimate the broader burden in the trillions, with costs reflected in higher prices and reduced opportunity.
There are 36,207,130 small businesses in the United States. They are all impacted by the excessive red tape and regulations. According to the U.S. Small Business Administration Office of Advocacy, over 80% of the paperwork burden for small businesses comes from the Internal Revenue Service (IRS) alone. Small businesses pay 38.7% of total private-sector payroll.
Regulatory costs do not remain confined to businesses. They are transmitted through the economy in the form of higher prices, reduced output, and weaker competition. This is where policy decisions meet the kitchen table.
As compliance costs rise, businesses adjust — which can potentially lead to price increase, slower hiring, and investment delays. Large firms may absorb these pressures more easily, but for small businesses and startups, they can determine whether an idea ever launches or a growing company stalls.
Basic rules are essential for safety, fairness, and stability. But there is a meaningful difference between targeted safeguards and an ever-expanding web of red tape that accumulates over time, slowing growth and discouraging opportunity.
Over time, this buildup affects economic mobility, especially for younger Americans entering the workforce. Entry-level jobs are often the first to be reduced as employers streamline operations, automate tasks, or consolidate roles. Wage growth can potentially also slow as more resources shift toward compliance rather than hiring and compensation.
For many workers — especially women balancing work and caregiving — fewer entry-level opportunities mean fewer pathways to build experience, stability, and upward mobility. A system meant to expand opportunity can unintentionally narrow the ladder it relies on.
The barriers are even more pronounced for entrepreneurs. Starting a business often requires navigating overlapping federal, state, and local permits, licenses, and regulations. These burdens fall hardest on those without significant capital or professional support, resulting in fewer startups and slower business formation, while favoring established firms with compliance infrastructure.
At its best, regulation protects consumers and ensures fair markets. But when it becomes overly complex and cumulative, it can function as a hidden tax on households, workers, and aspiring entrepreneurs. In child care, for example, decades of regulations beyond core health and safety standards have increased operational costs without better child well-being. Higher costs make child care more expensive while also creating barriers to entrepreneurs and reducing options for families.
AMERICA’S AFFORDABILITY CRISIS IS A HOUSING SHORTAGE. WE CAN FIX IT IN THREE STEPS
Policymakers should take seriously the cumulative impact of regulation — not just individual rules in isolation. Strengthening transparency, improving cost-benefit analysis, and streamlining overlapping requirements would help ensure regulation supports opportunity rather than unintentionally limiting it.
For American families trying to get ahead, that distinction matters more than ever.
Yali Nuñez is a visiting fellow at Independent Women and Director of Rapid Response and Political Communications for Stand Together.