City Studies

Baltimore: No Harbor For Entrepreneurs

By Scott G. Bullock [Economic Liberty]

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Executive Summary

Introduction

Baltimore is a city in transition. Many of Baltimore's once mighty industries are gone. The city itself has struggled with unemployment and a declining population. Despite the fact that more than 21 percent of city residents live below the poverty line while 16.4 percent of the population receives some type of public assistance, the City of Baltimore and the State of Maryland continue to create and enforce regulations that stifle would-be entrepreneurs, especially those on the bottom rungs of the economic ladder.

This report addresses the state of entry-level entrepreneurship in the City of Baltimore. Many small enterprises-in such areas as vending, newsstand operation, taxicab service, and garbage collection-face oppressive government regulation or even outright prohibition.

This report calls on the City not to lose sight of industrious, small-scale entrepreneurs struggling to survive in a changing Baltimore.

Vending

Unlike numerous other municipalities, the City of Baltimore does not place a cap on the number of vending permits it issues. This lack of an artificial, and, in many instances, arbitrary limit on permits should open an avenue of entry into the vending business. But although vendors do not face a numerical limit on entry, they nevertheless face heavy fees and numerous regulations imposed by both the State of Maryland and the City of Baltimore. To demonstrate how these fees can be prohibitive for an industrious but low-income vendor, consider the fact that a pushcart vendor who sells food must pay close to $1,000 in permits and fees to set up. That is above and beyond the cost of their wares. In addition, the City also prohibits vendors from the most potentially lucrative market in downtown-the Inner Harbor area. Baltimore's prohibitory attitude toward vending in tourist areas extends to vending within city parks. These are among the reasons why only about 60 vendors currently operate in downtown Baltimore. This report urges the State to remove itself entirely from the regulation and registration of vendors and allow localities to regulate vending on their streets in reasonable fashion.

In addition to these more modern vendors, Baltimore's horse-pulled fruit-and-vegetable salesmen, known as "arabbers," face an uncertain future. City-imposed regulations demanded by animal rights activists on top of intrusions of modern life threaten to eliminate this entrepreneural opportunity, which traditionally has been taken up by African-American men. Today, only about 40 arabber licenses are currently issued. Yet these industrious individuals represent a historical link to an era of more sound communities and to a strong entrepreneurial ethic, especially in areas of the city plagued by drugs and urban decay. Unlike most historic preservation efforts, the arabbers do not rely on government subsidies or regulation to preserve their tradition. Rather, the arabbers only ask that the government limit its role to reasonable regulation of the horses and stables, and allow them to continue in the occupation many of them learned from their fathers or grandfathers.

We recommend several reforms to open up opportunities for those who wish to vend. For example, the fees charged for permits, especially food-vending permits, should be substantially reduced. In addition, the City should streamline the regulatory process for Baltimore vendors, making it less burdensome and bureaucratic. Finally, the City should open the city-owned parks and the Inner Harbor area to limited vending.

Newsstands

It is ironic that Baltimore-whose logo proudly proclaims it to be, "The City That Reads"-prohibits newsstands entirely within its bounds. This ban is both unreasonable and raises serious First Amendment concerns by prohibiting a common means of access to information. Although limiting congestion and potential hazards on city streets are legitimate governmental objectives, the City can further such interests by regulating the size and location of newsstands, rather than prohibiting them outright.

Vehicles for hire

The State of Maryland's Public Service Commission regulates taxicabs and passenger-carrier services in Baltimore. It limits taxis to only 1,151-a number that has remained virtually unchanged for approximately 20 years. In order to obtain a permit, then, a driver must trade for one that has already been issued. As a result, even though the State imposes no fee for a permit from the Commission, obtaining one on the open market costs between $12,000 and $20,000.

Although some cabbies own their own permits, most cannot afford them and must therefore work for a company by paying lease prices as high as $85 a day for the "privilege" of driving for someone else. With gasoline costs averaging $20 to $30 a day, many cabbies must work very long days to turn a profit-sometimes as high as 17-hour shifts, even though the legal limit is 12 hours.

Baltimore's restrictive system of taxicab regulation has deteriorated working conditions for the drivers and has produced poor results for consumers. In Baltimore's minority communities, many cite inadequate taxicab service and long waits before a cab will arrive, if it arrives at all.

Among other recommendations, this report calls on the City to open entry into the taxicab market by lifting the taxi cap, thereby providing greater entrepreneurial opportunities for drivers and better service to consumers.

Cosmetology and Hairbraiding

The practice of African haircare is a growth industry throughout the nation. African hairstyling consists primarily of braiding or "cornrowing" hair. The style differs from traditional cosmetology in that African haircare eschews the use of chemicals, relaxants, and other trappings of traditional cosmetology. To practice the craft of hairbraiding in Maryland, one needed (until recently) a State-issued cosmetology license, which requires 1,500 hours of training in an approved school and an examination that includes demonstrating knowledge of hairstyles never used in African haircare.

Last year, the State Cosmetology Board unofficially exempted hairbraiding entirely from any type of cosmetology regulation. The Board should be commended for this position, but it should make this view official and explicit. Hairbraiding and hairbraiding salons could be inspected to ensure health and safety, but other irrelevant cosmetology regulations should be eliminated because they serve no legitimate governmental objectives and only stifle competition. Moreover, the Board should apply its insights on the deregulation of hairbraiding to the entire cosmetology profession.

Trash Removal

In contrast to Baltimore County, trash collection in the City of Baltimore is a public monopoly: Private companies are forbidden to provide trash removal services within the City limits. Perhaps that is why the City requires 508 employees paid by the taxpayers to remove garbage while the county requires only five public employees with 49 private companies doing the heavy lifting.

Child Care

Given Baltimore's alarmingly high rate of nearly 50 percent of households headed by single parents, it is essential to maintain low-cost and easily available child-care services. Maryland seems to have adopted a fairly reasonable regulatory regime for child care, with some exceptions. Child-care centers in Maryland must be licensed, while family child-care centers operated out of the home need only be "registered" with the State. Baltimore allows a home to care for up to eight children (the maximum permitted by the State) without obtaining a variance from Baltimore's Zoning Board of Appeals. A use permit required by the Zoning Board to operate a family child-care center costs $14, a reasonable fee. The State charges no fee for the license application, the licenses or registrations, or the orientation classes it requires for those who wish to provide child care. In contrast to such states as New York, Maryland also has rather reasonable educational requirements for child-care providers.

However, state requirements such as submitting a statement of the outdoor areas, playgrounds, parks, and pools near the home, seem directed not at protecting health and safety, but at guaranteeing a certain level of recreational opportunities outside the home. Moreover, Maryland's seemingly inflexible requirements for maintaining child-care centers, complete with mathematical equations on "useable floor space," may well serve as a barrier to the establishment of child-care centers.

Home-based Businesses

Clearly, Baltimore's zoning regulations that govern businesses operating in the home have not kept up with this important sector of the economy. As a result, the City has created a climate of uncertainty for those starting a business in the home. Although not aggressively enforced, these outmoded laws nevertheless make those who wish to start home-based businesses reluctant to contact any government official with questions or concerns, for fear of running afoul of the law. This atmosphere hinders the growth of home-based businesses and gives an air of illegitimacy to a vital, growing part of the economy.

Conclusion

A combination of state and local regulations has eliminated too many entry-level opportunities in Baltimore-whether in vending, newsstand operation, taxicab driving or trash removal. Although sports teams and tourism certainly bring jobs and dollars into the downtown area, Baltimore's small shops and entry-level entrepreneurs are also a vital, year-round source of employment and opportunity for those struggling to gain a foothold on the economic ladder. Removal of the barriers and regulations documented in this study will go a long way toward making Baltimore once again a center of commercial activity-whether the enterprises be large or small.

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