SMALL-BUSINESS REPORT - Tailored regulation may not spell relief

Small companies need these breaks, the thinking goes, because they have less money and fewer employees to use to comply with government rules. And those compliance costs often have been shown to be higher per employee at small businesses.

For example, the cost to comply with proposed changes to the barrier removal requirements of the Americans With Disabilities Act could be as much as four times higher per square foot for small firms than for large companies, according to a study released last week by the Small Business Administration's Office of Advocacy.

Advocates often push for public policy at the state and federal levels to ensure that small businesses are protected from these proportionately higher regulatory costs, which could hamper growth. Small firms are important job producers and society's primary innovators. They also employ about half of all private-sector employees.

So exemptions, delays, tiered systems and other special processes are put in place.

But does this regulatory relief achieve its goal?

That's the question posed in a new book from Santa Monica-based Rand Corp., "In the Name of Entrepreneurship? The Logic and Effects of Special Regulatory Treatment for Small Business."

Released Monday, the book concludes that sometimes the intent -- to level the playing field or even actively benefit small businesses -- falls flat.

"Obviously small businesses are very politically important at the local, state and national level, so policymakers generally are very eager to demonstrate they are doing something to support small business," said Susan M. Gates, a co-editor of the book and director of the Kauffman-Rand Institute for Entrepreneurship Public Policy ( www.rand.org/icj/centers/small_business/) at Rand.

"But it can be very easy to implement policies, then not track how they are doing," she said.

Gates and her colleagues looked into four regulatory areas: health insurance, employment, environmental protection and corporate securities.

What they found was surprising.