Delaware Piles on the Regulations
Center for Economic Policy and Analysis
November 20, 2020
By definition, government-imposed regulations are limits to individual and business freedoms. Some regulations are necessary, such as speed limits and mandatory auto insurance. Others are unnecessary, obsolete, or the result of administrative overreach. They should be tossed.
It is widely recognized that more regulations in an economy lead to lower economic growth. Data from the Mercatus Center on regulations by state confirms one of the significant reasons for Delaware’s weak economic performance.
Research has shown that it would take an ordinary person almost three years to read the entire U.S. Code of Federal Regulations. To assess the additional burden that state governments lay upon economic activity, the Mercatus Center developed StateRegData, a platform for analyzing and quantifying state regulatory text. The results for Delaware are instructive.
According to Mercatus, the Delaware Regulatory Code contains 104,562 restrictions and 6.7 million words. It would take an individual 374 hours to read the entire DAC. That’s just the state's regulations! It doesn’t count the myriad of local regulations like zoning, business signage, etc., etc.
To compare Delaware to other states, the total regulation words were divided by total employment in 2019 (BEA). The results, shown in the graph below, are astounding.
At 11 words of regulation per employee, Delaware far out-distances any other state, although the two smaller states (New Hampshire, South Dakota) also are above average. The slow-growing states of the Mid-Atlantic have far more words of regulations per employee than the economically booming states of Florida and Texas.
What do we do?
Regulations pile up over many decades because the admin employees are not tasked or motivated to reduce the outdated regulations. What has worked in some states to solve this problem is the Governor or Legislature legally announces that “all regulations of every admin. dept. are hereby repealed effective nine months from now.” This approach forces the admin. depts. to review their regulations and throw out the unnecessary ones, often resulting in an estimated 25% reduction in regulation word count.
Mercatus has not performed the regulation analysis for all the states, so an econometric analysis showing the link between words of regulation per employee and state economic growth is not yet possible.
Clearly, relative to other states, Delaware is seriously over-regulated.