The institute found a big problem: Some licenses force people to get training for skills they’ll never need. And that training could be prohibitively long and expensive. For example, in three states and Washington, D.C., you can’t open an interior design firm unless you’re licensed as a designer. that requires an average of six years of schooling and apprenticeship.
Jestina Clayton wanted to start a hair braiding business in her home near Salt Lake City. She checked with the state to be sure that she didn’t need a license. She was told several times that she didn’t, that braiding wasn’t one of the services covered by a cosmetology license. So Clayton went ahead and, in 2009, placed an ad online about her business. She got an e-mail threatening to report her to the state for working without a license. It turned out that the law had changed, and that she could not braid hair without a license.
Clayton explored cosmetology training, and found that no school nearby taught braiding. She would need 2,000 hours of training in other skills she didn’t need simply to have a legal braiding business. “It would be a waste of time and money,” Clayton said.
Clayton and the institute have filed suit in federal court in Utah to overturn the requirement.
Lawyers and academics who have studied licensing laws say the license hurdle is one way to limit or eliminate competition for those already in business. Often, the license, especially one that includes a variety of seemingly unrelated skills or services, is sought by a trade or industry group.
A license can “create barriers to entry and creates profits for those who are politically well connected,” said Steven Lanza, an economist and editor of The Connecticut Economy, a publication of the University of Connecticut.
The monks at Saint Joseph Abbey in St. Benedict, La., had always made simple pine coffins for themselves, but found that the public was interested in buying them. Abbot Justin Brown says that in 2007, the abbey started Saint Joseph’s Woodworks, but even before the business made its first sale, “we got a cease-and-desist letter from the State Board of Embalmers and Funeral Directors.” Under state law, in order for the monks to sell coffins, they had to be trained as funeral directors, including in embalming bodies.
No matter that they weren’t handling bodies.
The abbey tried to reach a compromise with the board, and appealed to the state legislature. But “there’s a strong lobby in the funeral industry in Louisiana,” Brown said. “They worked to put the law in and they didn’t want the law to be amended.”
Ultimately, the abbey sued in federal court and won last year. Scott Bullock, an attorney with the institute, said the court ruled that “there was no rational basis for requiring persons who only want to sell caskets to become licensed funeral directors.”
As the abbey’s case shows, changing a licensing law is difficult. And a lengthy court fight pits a would-be small-business owner against an industry group with greater financial means.
A business owner or a worker may also have to obtain licenses from a city, town or village. A 2005 study done for the Small Business Administration found that in Kentucky, “each local jurisdiction in which a company did business required separate registration, using different forms and asking for somewhat different information.”
“That is clearly an objectionable and unnecessary paperwork burden,” the SBA study concluded.
