Politicians love to claim that they plan to create jobs during campaign seasons— even if they aren’t always able offer a clear plan. But, according to the results of survey of the actual job creators who run the Nation’s small businesses, formulating one should be pretty simple: do away with ridiculous licensing requirements and minimize regulation.
The latest iteration of the Kauffman Foundation/Thumbtack.com Small Business Friendliness Survey found that a majority of 12,000 American small business owners polled cited professional licensing requirements as the most important regulatory issue in determining a region’s friendliness toward entrepreneurs.
“Licensing regulations were overwhelmingly the biggest headache for the small service businesses that we surveyed,” Jon Lieber, Chief Economist of Thumbtack.com, told Personal Liberty. “The time-cost and complexity involved with complying with multiple licenses in multiple jurisdictions were the single largest regulatory factor that affected perceptions of overall friendliness of a city or State.”
This is unsurprising, considering the 2012 report from the Institute for Justice which made this shocking observation about licensing regulations: “States consider an average of 33 days of training and two exams enough preparation for EMTs, but demand 10 times the training–372 days, on average–for cosmetologists.”
Beyond licensing, the small business poll found that overbearing environmental, zoning, health and safety regulatory burdens also inhibited business growth.
Taxes were also an issue for entrepreneurs— but concerns were more focused on confusing filing procedures than tax rates.
“[Tax rates were] a less important factor than the ease of regulatory compliance in determining the overall friendliness score of a jurisdiction,” the poll found. “Two-thirds of respondents said they paid their ‘fair share’ of taxes – that is, they felt like they were neither under-paying nor over-paying.”
According to Lieber, the business owners aren’t very pleased with the filing process at the Federal level.
“The Federal agency that we most often heard about was unsurprisingly the IRS,” he said, adding that the diverse group of entrepreneurs interacts with a wide range of Federal agencies— the IRS was the arm of government they all had in common.
If State and local governments want to take proactive steps to draw small business, according to the poll results, policymakers should forget about creating new regulations and create workforce-related training programs.
“Awareness of training programs raised overall scores by 10 percent, while 76 percent of those who said they were aware of government-sponsored training programs for business owners ranked their local government as ‘somewhat’ or ‘very supportive,’ and only 8 percent of these said local government was unsupportive,” the poll found.
So where are the Nation’s most entrepreneur-friendly regions?
“Utah, Idaho, Texas, Virginia and Louisiana gave their states the highest rating for friendliness to small business,” the survey said. “Small businesses in Colorado Springs, Boise and Houston gave their cities the highest ratings.
“In contrast, small business owners gave California, Rhode Island and Illinois an ‘F,’ while Connecticut and New Jersey both earned a ‘D’ grade. Sacramento, Providence and Buffalo were the survey’s worst-performing cities as rated by their small business owners.”
See how your State and city stacked up using the interactive graphic at Thumbtack.com.