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Hawaii’s Regulatory Landscape
Federal and State Rules and Some of Their Unintended Consequences
Hawaii is the 28th most regulated state in the US
The US Code of Federal Regulations and the Hawaii Code of Rules (28th largest in the US) represent a vast system of over 1.2 million combined regulatory restrictions.1 Research from the Mercatus Center shows that jurisdictions that allow regulations to consistently pile up over the years experience slower economic growth, but this effect can be reversed when policymakers actively cut red tape. Other studies from the Mercatus Center indicates that the growth in these regulations is correlated with increased poverty rates, lost jobs, and higher inflation, among other effects.
This snapshot will detail the regulatory situation in Hawaii and provide options for how policymakers can reduce the harm of excessive regulation by improving the management of their rulemaking system.
The State Landscape
The Hawaii Code of Rules (HCR) contains 108,741 restrictions and 6,438,101 words as of 2023, making the Aloha State the 28th most regulated state in the nation.
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The Federal Landscape
The US Code of Federal Regulations (CFR) is excessively large, spanning 1,097,563 regulatory restrictions and 105,954,356 words as of 2023. This creates enormous challenges for businesses and individuals striving for legal compliance. Researchers at the Mercatus Center estimate that the growth in federal regulations between 1997 and 2015 is associated with the following effects on the Hawaii economy:2
17,028
Additional people living in poverty
491
Lost jobs annually
7.35%
Higher prices
Solutions
The pace of policy change at the federal level is notoriously slow and difficult to accomplish, but policymakers in Hawaii can take tangible steps to counteract the negative impacts of both federal and state regulatory accumulation.
The two reforms suggested here can have the added benefit of improving the overall management of regulations, ensuring that the rules on the books are more likely to solve the problems they were intended to solve.
A few states have already enacted similar reforms in recent years. Read more about the impact of these reforms at Discourse Magazine.
Conclusion
Federal regulations are associated with large human and economic impacts both nationally and in the state of Hawaii. However, state regulations are another significant source of government rules and red tape, with their own human and economic consequences. The weight of these layers of regulation worsens economic conditions, inadvertently increasing poverty rates, destroying jobs, and raising prices. The path to reversing these trends broadly is simple: improve regulations by reducing their number.
1. Regulatory restrictions are a metric designed to act as a proxy for the number of prohibitions and obligations contained in regulatory text, as indicated by the number of occurrences of the words and phrases “shall,” “must,” “may not,” “required,” and “prohibited” in each state’s regulations.