New Study: Pennsylvania’s Overregulation Harms Economy and Costs Jobs

Harrisburg, Pa., September 19, 2023 — Reducing Pennsylvania state regulations by 36 percent would increase the state’s gross domestic product by $9.2 billion a year, a new Commonwealth Foundation study has found. That equals approximately $1,760 per household and 180,000 new Pennsylvania jobs.

The newly released report, “Cutting Red Tape in Pennsylvania,” reviews the Keystone State’s regulations, compares them to other states, and estimates how regulatory reform would improve Pennsylvania’s economic health.

According to the study, Pennsylvania has 166,219 regulatory restrictions, about 22 percent more than average. By comparison, the average state enforces about 136,000 regulations. Approximately 33,000 of Pennsylvania’s restrictions are related to environmental protection and natural resources—“the largest area of regulation in the Pennsylvania Code.”

“Regulations related to culture, recreation, and the arts come in at a distant second at just over 24,300 restrictions, followed by the nearly 19,000 regulatory restrictions related to industry, commerce, and development,” the report details.

“Sizeable academic literature exists demonstrating the negative relationship between the volume of regulation in a jurisdiction and economic growth in that region,” writes Dr. James Broughel, a senior fellow at the Competitive Enterprise Insitute and author of the study. “One can think of regulations using an analogy of dropping pebbles into a stream. The first pebble is insignificant and has no effect on the stream. Creating a pile containing a thousand pebbles might slow the flow of water. Meanwhile, a hundred thousand pebbles would create a dam that blocks the stream altogether.”

“Regulations,” explains Broughel, “work similarly with respect to the economy. A single regulation might sound like a good idea when viewed in isolation, but a hundred thousand regulations in combination together can bring the economy to a halt.”

The report notes that state regulations often lead to long wait times for energy development permit approvals. Permits that should be reviewed within 14 and 43 days sometimes take 250 days or longer.

“When it comes to cutting red tape, Pennsylvania has a lot of work to do,” said Commonwealth Foundation Director of Policy Analysis Elizabeth Stelle. “Regulations, even well-meaning ones, often wreak havoc on our state’s economy, burdening hardworking individuals and families in the process. This report serves as a wake-up call to our policymakers to systematically reduce red tape and limit its unintended economic consequences.”

The full report can be found here, and the executive summary can be found here. 

To schedule an interview with the report’s author, contact Christian Stellakis at [email protected] or by phone at (315) 720-3561.

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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.