Is Ohio a great place to run a business?
The knee-jerk reaction is to give that question a resounding “yes!” for an answer. From appealing to the whole spectrum of industries to having many diverse communities, Ohio is a great place to do business.
However, if you change the criteria of my question to focus on the costs of running a business, it gets harder to say “yes”.
Ohio ranks 39th out of all the states for business taxes according to the Tax Foundation’s 2021 State Business Tax Climate Index. We rank ahead of New York with the number of most local taxing jurisdictions. But worst of all, Ohio is the third-most regulated state according to a recent analysis conducted by the George Mason University Mercatus Center.
Members of the National Federation of Independent Business, in which I belong, ranked “unreasonable government regulations” as the sixth biggest problem to their success.
Picture that — Ohio is almost as regulated as California and New York, and we, unfortunately, just beat out Illinois. A highly-regulated environment is not conducive to business and economic growth. In fact, as California has gotten even stricter with regulation in the last few years, major companies have announced they are relocating their headquarters to other states, which have a substantially lower regulatory burden. These big corporations can make those kinds of interstate moves. Small businesses are the economic engines of every community and simply cannot pick up and move.
From a 50,000 foot view, it’s hard to see the real impact of regulations on small businesses. But take it from me – those costs add up. The Small Business Administration says the small business community bears the biggest cost of regulatory compliance, where we are paying nearly $3,000 per year in compliance costs per employee than big businesses. That’s $250 per employee per month. Almost every company or business is hiring right now. Many places are even increasing wages on job listings to attract employees. In the aggregate, regulatory compliance costs make running a business and employing people more expensive than they should be. But it’s also one of the areas where state policymakers can directly fix a problem daily affecting small businesses.
There are easy, meaningful, and most of all commonsense solutions to improving Ohio’s overall ranking as a business-friendly state. One great example is Senate Bill 9, a key vote for the NFIB, which has already passed the Ohio Senate as a priority bill and is making its way through the House. SB 9, if passed and signed into law by Gov. DeWine, would require a 30% reduction in existing regulations. This not only would pull us way out of the top five regulated states, but potentially make us even less regulated than Texas.
A lot of folks in DC and Columbus are talking about mandates. I am not personally a fan of any kind of unnecessary government mandate, but if our state government passes and signs Senate Bill 9 and mandates themselves to cut their own unnecessary, outdated, and duplicative regulations, then I will push for that mandate all day, every day. Because it will allow small businesses like mine to thrive and grow.
Tracie Sanchez is president of the Lima Pallet Company and a member of National Federation of Independent Business leadership council in Ohio.