City Studies

Running Boston's Bureaucratic Marathon

By Dana Berliner [Economic Liberty]

Read Full Report


Executive Summary

Introduction

Starting a small business in Boston often turns into a regulatory endurance test for would-be entrepreneurs. The City of Boston operates on the principle that more is better: more regulations, more separate requirements, more fees, more agencies reviewing an application, more hearings, more paperwork. Caught up in the process, Boston seems to have lost track of the purpose of their regulations: ensuring public health and safety and then allowing people to pursue their chosen professions and earn an honest living.

It is typical of Boston that there are eight different offices that offer assistance at speeding the bureaucratic process, rather than actually eliminating unnecessary requirements. But no matter how hard government workers try to help, start-up businesses often face a convoluted, onerous and expensive regulatory process. As the body of this report demonstrates, the City of Boston has created potent barriers to productive livelihoods, especially for those outside the economic mainstream.

Vehicles for Hire

Driving a taxi is an ideal first job for those who wish to enter the ranks of the employed. It does not require formal education and should not require large financial resources. An entrepreneur can earn a living simply by working hard. Or at least it used to be that way. Boston has made many businesses-but especially taxi driving-difficult to create, especially for those who are economically and socially disenfranchised.

With a cap of 1,565 on the number of taxi medallions it issues-a figure that has remained virtually unchanged since 1934-the City of Boston through the Police Department's Hackney Division certainly does its part to keep low-income residents out of this occupation. Because of the government-created scarcity, the cost of securing one of these precious government permits has risen to more than $100,000-a figure well out of range for the average entrepreneur, never mind those at the bottom rung of the economic ladder to success. The artificially low number of cab medallions has a number of ill effects: It drives up the cost of medallions, forces drivers to work too many hours to make a living, causes service gaps in poor and minority areas, and reduces the friendliness of service.

In addition to capping the number of legal taxis that may operate, Boston also bans the use of jitney vans. Jitneys are privately owned vehicles, often serving minority communities. They operate along fixed routes for a flat fee like buses but stop anywhere along the route like taxicabs. Despite the fact that jitneys fill the service gap left by the few legal taxis and enjoy great popularity at grocery stores and neighborhood shopping areas, the City bars these vital service providers from competing legally for customers.

On the other hand, where the City has allowed open entry into the transportation field-as it has with limousines-competition thrives, the community is served and entrepreneurial opportunities are created.

Vending

Technically, Boston peddlers may only operate within business districts and must move 200 yards after each sale. Downtown peddlers may work only between 8 p.m. and midnight. An illustrative example of what these industrious people must go through to succeed was seen by one flower vendor who is featured in the body of this report. To improve her quality of life, she decided to sell flowers, but faced a bevy of problems including harassing tickets because she did not move after every sale, run-ins with City bureaucrats who bounced her from one office to another in a paper chase for signatures, and threats from the City to revoke her license.

Child Care

Because caring for children requires kindness and common sense, but not higher education, child care makes an ideal career for budding entrepreneurs-especially for single or stay-at-home mothers. Such a career allows them to keep their own children close to them as they care for a few others. And as cities like Boston are required to move the poor off of welfare and into work, child care will prove particularly important.

Although Boston does not impose onerous educational and training requirements on those who wish to provide child care in their home, it does impose these requirements in the group child-care environment. Also, the City's intense regulatory and zoning requirements makes child care a difficult field to enter. Mothers with limited resources, who should be in a good position to work as day-care providers, find it difficult to meet all the requirements, which include approximately $400 in start-up fees, zoning regulations that foreclose opportunities for those who rent apartments, and detailed written plans on curriculum and child development that go well beyond public health and safety concerns.

Cosmetology and Hairbraiding

Even more burdensome requirements are placed on occupations like African hairbraiding. In Massachusetts, an African hairbraider must have a cosmetology license, which requires 1,000 hours of training. (Compare this to Massachusetts' requirement that armed security guards take only 160 hours of classes.) Hairbraiders are trained in such areas as manicuring, skin and makeup, permanent waves, "finger waves," "iron curls," haircuts, and haircoloring. This training is required despite the fact that hairbraiders will never use these skills. Not a single hour of hairbraiding is taught during the 1,000 hours of class.

Zoning, of course, can be a major obstacle to operating a braiding salon. Unless the former occupant was also a hair salon, the business will have to go through a change of occupancy hearing. In addition, in-home establishments may operate only in either the first floor or the basement. The shop may not be located in a portion of the house where it is necessary to walk through other portions of the house to get to the shop. Entrance to the shop can only be located in the front or side of the house and must be visible to whomever is dropping someone off for an appointment. Every one of these rules has almost no relationship to public health or safety.

Take-Out Restaurants and Catering

Boston's licensing requirements for take-out restaurants and catering are also overly difficult to satisfy. For the inexperienced, a successful journey through the approval process depends on luck-luck in finding the right building and luck in finding a helpful official as a guide.

One entrepreneur featured in this report decided to open a small restaurant, catering and take-out establishment. After selecting a location, she began acquiring the proper permits, first and foremost a change of occupancy permit that the City requires when there is a change in the kind of establishment serving the public. Such permits are automatically denied for take-out restaurants downtown, so a public hearing was required. This would be only the first of three public hearings she would be required to endure, sparking expensive legal and architectural fees, as well as a nightmare of zoning requirements. As the bureaucracy churned on, she was meeting her rent payments for her yet-to-be-City-approved business. Finally, all of her licenses were secured, including an entertainment license that would allow her to play a radio at the business. She opened some months ago and business is booming. Of the process, however, she says, "It was just awful."

In-Home Businesses

Although in-home businesses currently make up a relatively small percentage of businesses in Boston, with the expense of day care and the schedule flexibility of working at home, home businesses are the wave of the future. Boston is trying to accommodate this change, but so far is not entirely succeeding. Home professional offices and businesses with no non-resident employees and no "merchandise trading" are generally permitted. However, every other type of business requires a zoning hearing, either for a conditional use permit or a variance. Conditional uses are easier to obtain and less expensive. But both are time-consuming and often denied.

Conclusion

Boston and Massachusetts have been making efforts in recent years to become more hospitable to small business. However, to allow entrepreneurs to flourish, government must actually remove some of the regulatory barriers. Among the recommendations this report makes, are:

1. Remove excessive educational and training requirements from the field of cosmetology.

2. Remove arbitrary cap on taxi medallions and phase in a market system similar to limousines.

3. Remove extra layers of bureaucracy.

4. Dramatically reform the zoning process to reduce the need for hearings. Changes of occupancy within a commercial zone should be routinely approved, and the number of commercial and accessory uses permitted as of right should be increased.

5. Remove pointless licenses, permits and requirements.

6. Evaluate all regulations and remove or reform any that are not narrowly tailored to fulfill a legitimate governmental objective of protecting the public's health and safety without unduly hampering enterprise.

To allow entrepreneurs to thrive in Boston, City officials need to shift to a presumption in favor of economic liberty, instead of a presumption in favor of regulation. Only by crafting a close fit between health and safety ends and the means by which government erects regulatory barriers to entrepreneurship can would-be entrepreneurs be freed to provide their services, to create employment and to achieve their part of the American Dream.

Email Address
Please enter a valid email address
Share

Institute for Justice
901 N. Glebe Road, Suite 900
Arlington, VA 22203
Tel 703.682.9320, Fax 703.682.9321
© 1997-2014