October 2004

Seattle Entrepreneur Study Seeks to Lift Regulatory Clouds Off Small Businesses

By Jeanette Petersen

Matching the entrepreneurial spirit of Washington’s frontier forefathers, the framers of the Washington Constitution included provisions designed to protect the unalienable right to acquire property and pursue economic freedom. Unfortunately, these constitutional provisions have yet to be realized to their true and intended potential. As a result, economic liberty is under attack in Washington State.

The Institute for Justice Washington Chapter (IJ-WA), in conjunction with the Washington Policy Center, has published a new study, Entrepreneurship in the Emerald City: Regulations Cloud the Sparkle of Small Businesses. The study examines the entrepreneurial atmosphere in Washington State and, specifically, the greater Seattle area, exposing the many invisible obstacles to free enterprise.

Standing between entrepreneurs and their dreams of economic success are innumerable state, county and municipal regulations. Washington’s administrative code currently totals more than 34,000 pages. A single business owner with no employees must conform to 35 sets of regulations enacted by local, state and federal agencies. If a business owner decides to hire even one employee, the business must then conform to 58 sets of regulations promulgated by 28 governmental agencies. This staggering amount of regulatory red tape creates a crushing burden for those seeking to legally run a business in Seattle.

From taxicabs to street vendors and from cosmetology to childcare, the state, counties and cities have erected a regulatory quagmire of overlapping jurisdictions that confuse even the most sophisticated entrepreneur. These particular occupations were chosen for study because they are most readily accessible to aspiring entrepreneurs—including many immigrants, women and minorities—who may not have the formal education or capital to start a large business.

Regulators in the State of Washington and the City of Seattle drive up the cost for small businesses entering the market and thereby increase costs to consumers and diminish service. When regulations lack a meaningful relationship to health and safety and thwart legitimate enterprises, they, at best, simply serve to impose unnecessary burdens on small businesses and entry-level entrepreneurs. At worst, they protect entrenched monopolies from competition to the detriment of entrepreneurs and consumers alike.

The Institute for Justice has completed studies demonstrating the extensive regulatory barriers to entry-level entrepreneurship in seven U.S. cities: Baltimore, Boston, Charlotte, Detroit, New York, San Antonio and San Diego. Recently, the Institute for Justice Arizona Chapter detailed regulatory burdens facing two major cities in the Grand Canyon State—Phoenix and Tucson. With this newest study, IJ-WA advances the Institute’s campaign to restore economic liberty—the right to engage in the occupation of one’s choosing unencumbered by irrational government regulations—as a basic civil right.

Jeanette Petersen is an Institute for Justice Washington Chapter staff attorney.