Pennsylvania’s Regulatory Landscape

Federal and State Rules and Some of Their Unintended Consequences

Pennsylvania is the 14th most regulated state in the US

The US Code of Federal Regulations and the Pennsylvania Code (14th largest in the US) represent a vast system of over 1.3 million combined regulatory restrictions.1 Research from the Mercatus Center shows that jurisdictions that allow regulations to consistently pile up over the years experience slower economic growth, but this effect can be reversed when policymakers actively cut red tape. Other studies from the Mercatus Center indicates that the growth in these regulations is correlated with increased poverty rates, lost jobs, and higher inflation, among other effects.

This snapshot will detail the regulatory situation in Pennsylvania and provide options for how policymakers can reduce the harm of excessive regulation by improving the management of their rulemaking system. 

 

The State Landscape

The Pennsylvania Code (PC) contains 164,032 restrictions and 10,516,274 words as of 2023, making the Keystone State the 14th most regulated state in the nation.

 
 

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The Federal Landscape

The US Code of Federal Regulations (CFR) is excessively large, spanning 1,097,563 regulatory restrictions and 105,954,356 words as of 2023. This creates enormous challenges for businesses and individuals striving for legal compliance. Researchers at the Mercatus Center estimate that the growth in federal regulations between 1997 and 2015 is associated with the following effects on the Pennsylvania economy:2

187,808

Additional people living in poverty 

4,954

Lost jobs annually 

7.35%

Higher prices 

Solutions

The pace of policy change at the federal level is notoriously slow and difficult to accomplish, but policymakers in Pennsylvania can take tangible steps to counteract the negative impacts of both federal and state regulatory accumulation.

The two reforms suggested here can have the added benefit of improving the overall management of regulations, ensuring that the rules on the books are more likely to solve the problems they were intended to solve.

Regulatory Budget

Place a cap on the number of regulations the state can have at one time with a target lower than the current stock of regulations.

This can be done by setting a goal for a percentage to be cut, establishing a “one in, X out” rule, or monetizing the costs of regulations so that new regulatory costs are offset by eliminating existing regulatory costs.

Regulatory Sunset

Set a requirement that all regulations be removed after a time unless explicitly renewed by the legislature.

This standard builds in an implicit periodic review of rules. If the regulation is providing the intended benefit, it doesn’t need to be cut. If the regulation is ineffective or burdensome, it can be eliminated. If policymakers allow a regulation to expire without reviewing it, why should their constituents continue to be held accountable for it?

A few states have already enacted similar reforms in recent years. Read more about the impact of these reforms at Discourse Magazine.

Conclusion

Federal regulations are associated with large human and economic impacts both nationally and in the state of Pennsylvania. However, state regulations are another significant source of government rules and red tape, with their own human and economic consequences. The weight of these layers of regulation worsens economic conditions, inadvertently increasing poverty rates, destroying jobs, and raising prices. The path to reversing these trends broadly is simple: improve regulations by reducing their number.

Notes

1. Regulatory restrictions are a metric designed to act as a proxy for the number of prohibitions and obligations contained in regulatory text, as indicated by the number of occurrences of the words and phrases “shall,” “must,” “may not,” “required,” and “prohibited” in each state’s regulations.

2. View the full methodology.

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