Responses from the 2014 Thumbtack Small Business Friendliness Survey demonstrated that service pros are more frustrated by professional licensing regulations than any other regulatory factor in their professional lives. Of all the different factors that Thumbtack looked at, licensing rules were the number one regulatory factor that predicted overall friendliness levels for local governments. The presence of a licensing regime had a statistically significant negative effect on overall friendliness scores. But the nearly 13,000 pros we heard from were not of one mind when it came to the importance of licensing in their industries.
What kind of licensing are we talking about? Licensing rules vary by industry and by state, county, and city. In some cases state licenses are required for occupations like barbers and security guards. In other cases county governments require licenses before electricians are allowed to pull permits to work. In some cases these are certifications like those obtained by Certified Public Accountants, which are administered by a private industry body but required in order to work in most places.
Fully half the pros who responded to our survey were subject to a licensing rule at one or more level of government. And these requirements elicited strong responses in many cases.
Some pros who responded to the survey took a “leave us alone” attitude towards the government. One pro who does pest control told us, “we don’t want any support from government, we just don’t want these suffocating regulations and taxes.” One caterer said the licensing made doing their job very difficult: “It’s pretty difficult to find a licensed kitchen to work out of to meet all the necessary requirements.” And another person in the catering industry said, “If only government could get out of the way, so many more people could have jobs.”
But not all pros wanted to see less government. Time and time again, service pros told us that unlicensed professionals were undercutting licensed pros on price (and, in their view, delivering a lower quality product). These pros didn’t want less government but rather more government – they wanted to see their local government better enforcing licensing rules. One contractor said, “It makes it very hard, for there is a lot construction done by unlicensed people.” He called this “the main killer of work for licensed contractors.” A landscaper said, “I would like more regulation of unlicensed professionals” as “some cities have demanded to see state licenses and others have not.”
The lack of enforcement in my industry from government agencies opens the public to unlicensed activity and unfair pricing as they carry no insurance, no workman’s comp, no state license fees, etc. The city turns a blind eye on all the unlicensed activity yet with me I am supposed to comply to all their rules, regulations, and taxes & am financially punished if I do not. – Contractor, Los Angeles
One frequent complaint was that cities and counties that neighbor each other do not have the same rules for licensing and do not recognize each other’s licenses, meaning that a pro would have to get multiple licenses to work in different cities or counties. For example, a tile contractor wrote, “There is no state licensing for industry, so we are required to get licensed in each county and city which is time consuming and costly. There are no universal codes used for each municipality so city-to-city and county-to-county it is a cluster.”
A painter in Florida echoed many other pros in the survey by suggesting that the state offer a universal license. He wrote, “It is absolutely SICK that someone can get a painting license in Tampa Bay area only for one county, where the person lives. In this economy, it is very difficult to get work and we are sick of turning down work just because it is in a different county, just 10 miles away.”
What does this mean? Regulations should be enforced – states and cities that were rated as having better enforcement saw higher overall friendliness scores on average. But compliance should be simple – the more burdensome the rules for compliance, the lower the scores for a city or state. And to the extent possible rules should be harmonized across jurisdictions so pros don’t have to get licensed in more than one place.
What do you think? Do you want to see more or less regulation in your industry? Are licensing rules well enforced? Should they be eliminated altogether? Let us know what you think in the comments.