How does government regulation impact the retail sector?

The retail industry includes many different sub-sectors, ranging from groceries to clothing to furniture and beyond. Each of them faces its own unique regulatory challenges, although all retailers are affected by nationwide labor impositions such as minimum wage and overtime pay laws. As with all industries, government regulation adds compliance costs and possible legal liabilities to the retail sector.

The primary federal entities that retailers deal with are the U.S. Department of Labor, or DOL, and the Federal Trade Commission, or FTC, but the U.S. Department of Homeland Security plays an ever-larger role in the area of web content and cyber security.

Taxes are not technically considered a regulation, but it is generally held that retailers pay the highest corporate tax rate in the United States. This is because retailers have virtually no obvious tax loopholes and very dispersed lobbying interests.

Additionally, most brick-and-mortar retailers are charged state sales taxes while Internet-based retailers are not. This has been an enormous advantage to companies such as Amazon and a major cost to the Wal-marts of the world, though there have been recent legislative efforts to force digital businesses to pay sales taxes, too (see "Pros and Cons of an Internet Sales Tax").

Brick-and-mortar retailers have to deal with an ever-growing litany of labor relations laws and contract restrictions with employees. These begin with how much employees can be paid and how long they can work, but the DOL also imposes labor certification processes and makes it relatively easy for retailers to be brought to court by disenchanted current or former employees.

The FTC is the only federal agency with jurisdiction over both consumer protection and inter-business competition. If the DOL is the major force in retailer-employee relationships, it is the FTC that plays a major role in retailer-consumer relationships.