Sangamon Sun

The only thing occupational licenses do is give some businesses a license to try to prevent other businesses from existing, Dick Carpenter, the director for strategic research at the Institute for Justice, said on a Chicago radio program recently.

“It forces people who just want to open a business or get in to work to go to the government and ask for permission,” Carpenter told Dan Proft and Amy Jacobson, the hosts of "Chicago’s Morning Answer."

Proft is a principal of Local Government Information Services, which owns this publication.

The Institute for Justice is non-profit public interest law firm based in Arlington, Virginia.

Organizations and associations go to the government and ask for a license because it puts a bottleneck in their industry, Carpenter argued.

"It gives them an economic advantage as a result,” he said.

The City of Chicago Small Business Center issues business licenses and regulates business activities in the city. The application fee for most small business licenses is $250, which Carpenter said can keep low-income and minority groups from achieving their entrepreneurial goals, thus affecting entire communities.

The costs trickle down “to consumers in the form of higher prices and fewer job opportunities,” he said, adding that occupational licenses also reduce interstate mobility and stifle innovation, which adds another heavy burden on small-business owners.

“A license hangs a giant 'not welcome' sign at your state border because it makes it very difficult for people who are in a state that is unlicensed to go to another state that is licensed,” Carpenter said.

The Illinois Policy Institute said Chicago makes starting a business a seemingly endless task.

"Setting up a storefront requires additional costly permits and may involve substantial delays," it said on its website. "Displaying a sign adds six to eight weeks to the process, or a minimum of 60 days if the entrepreneur wants to hang the sign himself. Moreover, it is difficult to obtain a definitive list of all the requirements an entrepreneur must meet before he can welcome customers – this in itself is a barrier to starting a business."  

The cost of licensing and increasing the number of steps it takes to start a business helps keep wealth out of the hands of everyday American entrepreneurs, Carpenter argued. He said other regulatory options can be used in place of licensing to achieve some of the same benefits without imposing the significant costs. 

“We don’t need licensing to regulate," Carpenter said. "We can use certification.  It sends a signal to consumers that this person has completed the education and training and examinations."