State-level regulation can shape how easily firms expand, hire, and raise wages within a state. Drawing upon 2016–2024 data from the State RegData database, this research in brief analyzes the relationship between the number of state-level regulatory restrictions and measures of employment, wages, and firm establishment across 87 industries.

Key Findings:

• Greater state regulatory burdens are associated with materially slower employment and wage growth. Doubling state regulatory restrictions on an industry is associated with an 8.8 percent decline in employment growth and a 5.7 percent decline in wage growth.
• Cutting regulatory restrictions by 25 percent increases employment growth by 4.4 percent. For the average state, this would have meant 9,966 additional jobs over the study period.
• State regulatory codes now total more than 400 million words, underscoring the scale and complexity of the compliance environment businesses face.

Policy Implications:

• States can use periodic review and economic scrutiny of regulations—through tools such as sunset review, red-tape reduction initiatives, economic analysis requirements, and legislative review of major rules—to identify obsolete or disproportionately costly requirements and support stronger wage and employment growth.

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