The Regressive Effects of Regulation | 2022 Edition

May 2, 2022

The effects of broad federal policies on state economies vary according to states’ unique circumstances. Consequently, a policy can have positive or negative effects that were completely unanticipated at the policy’s inception. All too often, the adverse effects of regulation cause outsize harm to the most vulnerable members of society. We call these unintended negative consequences “regressive effects.”

We have constructed a series of snapshots that estimate these regressive effects in each state, including lost businesses and jobs, inflated consumer prices, and increased poverty and income inequality. Each state’s snapshot also reports where the state ranks among the rest of the states in terms of the burden of state-level regulations. Please click on the map above to see each state’s results.

The Regressive Effects of Regulations in Wyoming

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Wyoming, federal regulation growth since 1997 is associated with 10,704 more people living in poverty and a 4.75 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Wyoming residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 10,704 people living in poverty in 2019 (55,776 actually in poverty versus 45,072 if there had been no regulation growth) and an increase in the poverty rate of 1.9 percentage points (9.9 percent actually living in poverty versus 8 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Wyoming increased by 95 percent and is associated with an increase in Wyoming’s poverty rate of 23.75 percent. As of 2019, the overall poverty rate in Wyoming stood at 9.9 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 8 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 10,704 fewer people living in poverty in Wyoming in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Wyoming residents and businesses between 1997 and 2017 is associated with a 4.75 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Wyoming is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Wyoming increased by 95 percent, and that increase is associated with a 4.75 percent increase in Wyoming’s level of income inequality. As of 2018, Wyoming was the 6th most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).

The Regressive Effects of Regulations in Wisconsin

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Wisconsin, federal regulation growth since 1997 is associated with 115,425 more people living in poverty and a 4.85 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Wisconsin residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 115,425 people living in poverty in 2019 (591,404 actually in poverty versus 475,979 if there had been no regulation growth) and an increase in the poverty rate of 2.03 percentage points (10.4 percent actually living in poverty versus 8.37 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Wisconsin increased by 97 percent and is associated with an increase in Wisconsin’s poverty rate of 24.25 percent. As of 2019, the overall poverty rate in Wisconsin stood at 10.4 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 8.37 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 115,425 fewer people living in poverty in Wisconsin in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Wisconsin residents and businesses between 1997 and 2017 is associated with a 4.85 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Wisconsin is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Wisconsin increased by 97 percent, and that increase is associated with a 4.85 percent increase in Wisconsin’s level of income inequality. As of 2018, Wisconsin was the 42nd most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).

The Regressive Effects of Regulations in West Virginia

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of West Virginia, federal regulation growth since 1997 is associated with 41,367 more people living in poverty and a 3.45 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting West Virginia residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 41,367 people living in poverty in 2019 (281,175 actually in poverty versus 239,808 if there had been no regulation growth) and an increase in the poverty rate of 2.38 percentage points (16.2 percent actually living in poverty versus 13.82 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon West Virginia increased by 69 percent and is associated with an increase in West Virginia’s poverty rate of 17.25 percent. As of 2019, the overall poverty rate in West Virginia stood at 16.2 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 13.82 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 41,367 fewer people living in poverty in West Virginia in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting West Virginia residents and businesses between 1997 and 2017 is associated with a 3.45 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in West Virginia is not surprising. From 1997 to 2017, the effective federal regulatory burden upon West Virginia increased by 69 percent, and that increase is associated with a 3.45 percent increase in West Virginia’s level of income inequality. As of 2018, West Virginia was the 50th most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality)

The Regressive Effects of Regulations in Washington

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Washington, federal regulation growth since 1997 is associated with 93,991 more people living in poverty and a 2.95 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Washington residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 93,991 people living in poverty in 2019 (731,216 actually in poverty versus 637,225 if there had been no regulation growth) and an increase in the poverty rate of 1.26 percentage points (9.8 percent actually living in poverty versus 8.54 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Washington increased by 59 percent and is associated with an increase in Washington’s poverty rate of 14.75 percent. As of 2019, the overall poverty rate in Washington stood at 9.8 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 8.54 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 93,991 fewer people living in poverty in Washington in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Washington residents and businesses between 1997 and 2017 is associated with a 2.95 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Washington is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Washington increased by 59 percent, and that increase is associated with a 2.95 percent increase in Washington’s level of income inequality. As of 2018, Washington was the 22nd most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).

The Regressive Effects of Regulations in Virginia

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Virginia, federal regulation growth since 1997 is associated with 101,063 more people living in poverty and a 2.8 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Virginia residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 101,063 people living in poverty in 2019 (822,944 actually in poverty versus 721,881 if there had been no regulation growth) and an increase in the poverty rate of 1.22 percentage points (9.9 percent actually living in poverty versus 8.68 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Virginia increased by 56 percent and is associated with an increase in Virginia’s poverty rate of 14 percent. As of 2019, the overall poverty rate in Virginia stood at 9.9 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 8.68 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 101,063 fewer people living in poverty in Virginia in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Virginia residents and businesses between 1997 and 2017 is associated with a 2.8 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Virginia is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Virginia increased by 56 percent, and that increase is associated with a 2.8 percent increase in Virginia’s level of income inequality. As of 2018, Virginia was the 28th most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).

The Regressive Effects of Regulations in Vermont

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Vermont, federal regulation growth since 1997 is associated with 10,830 more people living in poverty and a 4.35 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Vermont residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 10,830 people living in poverty in 2019 (60,624 actually in poverty versus 49,794 if there had been no regulation growth) and an increase in the poverty rate of 1.8 percentage points (10.1 percent actually living in poverty versus 8.3 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Vermont increased by 87 percent and is associated with an increase in Vermont’s poverty rate of 21.75 percent. As of 2019, the overall poverty rate in Vermont stood at 10.1 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 8.3 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 10,830 fewer people living in poverty in Vermont in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Vermont residents and businesses between 1997 and 2017 is associated with a 4.35 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Vermont is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Vermont increased by 87 percent, and that increase is associated with a 4.35 percent increase in Vermont’s level of income inequality. As of 2018, Vermont was the 41st most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).1

The Regressive Effects of Regulations in Utah

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Utah, federal regulation growth since 1997 is associated with 47,539 more people living in poverty and a 4.1 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Utah residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 47,539 people living in poverty in 2019 (279,435 actually in poverty versus 231,896 if there had been no regulation growth) and an increase in the poverty rate of 1.5 percentage points (8.8 percent actually living in poverty versus 7.3 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Utah increased by 82 percent and is associated with an increase in Utah’s poverty rate of 20.5 percent. As of 2019, the overall poverty rate in Utah stood at 8.8 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 7.3 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 47,539 fewer people living in poverty in Utah in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Utah residents and businesses between 1997 and 2017 is associated with a 4.1 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Utah is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Utah increased by 82 percent, and that increase is associated with a 4.1 percent increase in Utah’s level of income inequality. As of 2018, Utah was the 21st most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).1

The Regressive Effects of Regulations in Texas

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Texas, federal regulation growth since 1997 is associated with 717,425 more people living in poverty and a 4.55 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Texas residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 717,425 people living in poverty in 2019 (3,870,944 actually in poverty versus 3,153,519 if there had been no regulation growth) and an increase in the poverty rate of 2.52 percentage points (13.6 percent actually living in poverty versus 11.08 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Texas increased by 91 percent and is associated with an increase in Texas’s poverty rate of 22.75 percent. As of 2019, the overall poverty rate in Texas stood at 13.6 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 11.08 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 717,425 fewer people living in poverty in Texas in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Texas residents and businesses between 1997 and 2017 is associated with a 4.55 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Texas is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Texas increased by 91 percent, and that increase is associated with a 4.55 percent increase in Texas’s level of income inequality. As of 2018, Texas was the 8th most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality).

The Regressive Effects of Regulations in Tennessee

April, 2022

KEY FINDINGS

Regulations have unintended consequences, and these consequences can disproportionately affect low-income households. For example, more regulations are associated with higher consumer prices, fewer small business start-ups, and fewer new jobs. Recent research also shows that a greater regulatory burden is associated with increased poverty rates and higher levels of income inequality.

Within the state of Tennessee, federal regulation growth since 1997 is associated with 165,875 more people living in poverty and a 4.4 percent increase in income inequality.

POVERTY

Given the growth of federal regulations affecting Tennessee residents and businesses between 1997 and 2017, we estimate that regulation growth over this period is associated with an additional 165,875 people living in poverty in 2019 (919,850 actually in poverty versus 753,975 if there had been no regulation growth) and an increase in the poverty rate of 2.49 percentage points (13.8 percent actually living in poverty versus 11.31 percent if there had been no regulation growth).

The Mercatus Center’s Federal Regulation and State Enterprise (FRASE) index measures the effective federal regulatory burden upon a state (defined as “the degree of impact federal regulations have on a state’s economy relative to federal regulations’ impact on the national economy”). Using the FRASE index, researchers have found that states with a higher incidence of federal regulations tend to exhibit higher poverty rates. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to about a 2.5 percent increase in the poverty rate.

From 1997 to 2017 (the period for which FRASE estimates are available), the effective federal regulatory burden upon Tennessee increased by 88 percent and is associated with an increase in Tennessee’s poverty rate of 22 percent. As of 2019, the overall poverty rate in Tennessee stood at 13.8 percent. If the increase in the regulatory burden had not occurred, our research suggests that the poverty rate could have been as low as 11.31 percent in 2019. Though this may not seem like a large difference in relative terms, it would have amounted to 165,875 fewer people living in poverty in Tennessee in 2019.

INCOME INEQUALITY

We estimate that the accumulation of federal regulation affecting Tennessee residents and businesses between 1997 and 2017 is associated with a 4.4 percent increase in income inequality.

Using the FRASE index, researchers have found that states with a higher incidence of federal regulations also have higher levels of income inequality. Specifically, a 10 percent increase in the effective federal regulatory burden upon a state corresponds to an approximate 0.5 percent increase in the state’s Gini coefficient (the most commonly used measure of income inequality).

In view of the link between rising poverty and federal regulations, the increase in income inequality in Tennessee is not surprising. From 1997 to 2017, the effective federal regulatory burden upon Tennessee increased by 88 percent, and that increase is associated with a 4.4 percent increase in Tennessee’s level of income inequality. As of 2018, Tennessee was the 18th most unequal state in terms of income inequality (1 = most inequality, 50 = least inequality)

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