The Business Roundtable released a study yesterday showing that the regulatory policies of six federal agencies cost 48 major corporations a total of $2.6 billion in directly measurable effects in 1977.
The study was another in a stack of reports by economists, consumer groups, government officials and businesses that have begun to pile up as the debate over government regulation has intensified.
What sets this one apart is its speccificity.
International Business Machines Corp. Chairman Frank Cary, speaking for the Roundtable, an association of 180 large corportions, called the study a "snapshot" of the cost impact of regulation. It covered only one year and only 48 companies which were not intended to be representative of American industry.
It also counted only the incremental cost to these firms of regulations issued by six agencies, based mostly on the specific accounting and engineering data of the companies.
Unlike previous studies, this one made no attempt to measure each secondary ondary effects as productivity losses, delays and foregone opportunities -- effects which many companies say has pushed the cost of government regulation into the tens of billions of dollars.
Cary said the Roundtable study represents only "the tip of the iceberg" in the cost picture. He said this at a press conference where he was flanked by a sketch of a tip of an iceberg.
He said the intent of the study was to carry the cost debate away from unmeasurable and down to hard data. "It is important to stop comparing our visceras and start comparing our facts," he said.
Harvey kapnick, chairman of Arthur Anderson, the accounting firm which was paid $287,000 to conduct the year-long study, heralded the report as "a breakthrough in cost accounting techniques."
As might be expected, the study revealed that different kinds of companies were affected in varying degree by government regulations. For instance, the incremental cost of OSHA rules averaged $6 per worker per year in banking but $220 per worker in the chemical industry. Also, federal equal opportunity rules had the most costly effect on the communications and machinery industries, while Department of Energy regulations weighed most heavily on four other industries: oil and gas, electrical machinery, transportation equipment and electric and gas services.
Overall, the study indicated that manufacturing companies suffered the most, accounting for $2.3 billion of the total regulatory burden.
At the same time, it was revealed that some regulatory agencies imposed significantly higher costs than others. The Environmental Protection Agency was far and away the most expensive promulgator of rules, accounting for 77 percent of the total. The Federal Trade Commission proved the least imposing, contributing only one percent of the total cost.
Roundtable spokesmen emphasized that this should not be taken as the final word on which are the least costly and the most costly regulatory agencies, because the figures were based only on the state of things in 1977. Most of the costs of adhering to OSHA rules, for instance, were incurred in the early 1970s in the period immediately following adoption of the standards and so did not show up in the study.
In its own defense, the EPA issued a statement yesterday which said the Roundtable study included "probably an overstatement of EPA's share of the total regulatory burden."
The report noted that most of the added costs to business as a result of regulation were passed on to consumers, resulting in an increase in company prices of more than one percent.
The total cost burden was also equivalent to 10 percent of the capital expenditures made by the 48 companies in 1977.