Home of Chicago Laws
by Elizabeth Milnikel
& Emily Satterthwaite
Institute for Justice
In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of shortcuts or settling for less. It has not been the path for the faint-hearted—for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things—some celebrated but more often men and women obscure in their labor—who have carried us up the long, rugged path towards prosperity and freedom.
-— Inaugural Address of President Barack Obama, January 20, 2009
In Chicago, and all across the United States, we rely on the risk-takers, the doers, the makers of things. We rely on inventive entrepreneurs who have a bright vision for the future. We rely on them to turn the wheels of the economy by creating new jobs for themselves and others, and sometimes even by creating entire new industries. And, in a humbler fashion, we rely on people who have trouble finding work to figure out a way to make a living and to be self-sufficient. We rely on them to use their talents to the best of their abilities to contribute to the life of our city.
In fact, we rely on entrepreneurs to make Chicago what it is. Chicago is a proud city of neighborhoods, and those neighborhoods take their character from the small, independent businesses that populate them: the sari shop on Devon, the German apothecary in Lincoln Square, the hipster bar in Wicker Park, the galleries in River North, the taquerias in Pilsen, the blues club in Woodlawn, the barber shop in Lawndale. Without those distinctive landmarks, without the reminders of a neighborhood’s ethnic roots, without those favorite gathering places, we could not tell one neighborhood from another.
Yet, in spite of the importance of small businesses to Chicago, there are myriad laws on the books that make it difficult—sometimes even impossible—for people to start new enterprises. The laws have been urged on legislators over the years, maybe to address a fleeting problem, maybe to help existing businesses tamp down the competition, maybe to make the urban environment conform to the fashion of the moment. And they have piled up in layers. The legal requirements are often completely unnecessary to protect the public, but they are never revisited by legislators who focus on passing additional regulations and generating more revenue from fines and fees. Instead of a navigable system designed to make sure businesses meet reasonable health and safety standards, the overlapping rules of the city of Chicago and the state of Illinois create a matrix that is so confusing and nonsensical that it often seems designed to stop entrepreneurs in their tracks.
When legal rules and requirements multiply, so do fees, forms and delays. The payments and paperwork required to start a business have gotten wildly out of hand. As a result, courageous, creative entrepreneurs—especially lower-income people who cannot afford to pay fees, much less lawyers—are discouraged from taking the risks that we rely on them to take. Or people decide to operate in the shadow economy, off the books, where they can evade detection but they cannot grow their businesses to their full potential and they do not contribute to their communities as public role models or taxpayers. Nevertheless, local officials keep interfering with Chicagoans’ freedom to start businesses. They treat entrepreneurs like a hazard that must be guarded against or like a cash cow for easy revenue. The gatekeepers keep designing new gates and they grow dependent on the tolls they collect.
Laws impeding entrepreneurship are harmful to Chicago’s local economy, but deeper than that, they are anathema to our deep-seated conviction that Americans can be whatever they want to be without having to seek the government’s permission first. The Illinois Supreme Court has stated in no uncertain terms that each citizen of Illinois has the “constitutional right to pursue his calling and exercise his own judgment as to the manner of conducting it,” and the lawmakers can restrict that right only when necessary “to protect the public health and secure the public safety and welfare.”1 Chicagoans may be sadly accustomed to paying fees to the local government to accomplish anything, but Chicagoans must battle the presumption that lawmakers have carte blanche when it comes to determining what work people can do and how they should do it. Neither the state legislature, nor state agencies, nor the Mayor’s office, nor the aldermen should have the power to choose who can set up a new business or how it should be run. Americans have the right to economic liberty-—earning a living in the occupation of their choice free from arbitrary or excessive government regulations.
In this report, we describe some of the excessive legal requirements that confront entrepreneurs in Chicago, focusing on onerous restrictions on the very occupations that most people expect to be open to people of all backgrounds and all income levels. We urge government officials, legislators and citizens to demand a repeal of these legal requirements, which constrain people’s futures without doing anything to protect the public’s health or safety. By truly opening Chicago to small businesses that are competing to serve their customers’ needs, we will ensure that our city of neighborhoods flourishes. We will free people to pursue their dreams and create new ways to maximize their talents. And we will have a city that really works.
Every entrepreneur who wants to sell goods or services in Chicago must register with the city and pay a fee. If there are no special rules or qualifications for the particular kind of business proposed, the entrepreneur must get a limited business license, which costs $250 every two years.2 Operating without the license can result in penalties from $200 to $500 per day. The licensing fees are high enough to discourage some lower-income entrepreneurs, but they are just the beginning. Every entrepreneur faces additional zoning and building regulations, as well as requirements for aldermanic approval that make Chicago look like a medieval fiefdom. Chicago requires business owners to jump through so many hoops that many promising businesses cannot get started or get shut down for no good reason.
For example, many businesses must have off-street parking, according to the zoning code, and they can be fined daily for their failure to provide a parking lot. To modify a space to accommodate their business, entrepreneurs must go through the notoriously corrupt and slow building permitting process. It is common practice to pay people to help with that cumbersome bureaucratic nightmare, and now the city requires special licenses for those so-called expediters.
Approval of the local alderman is required at many stages of developing a business, even to hang a sign or awning outside a business. It is conventional wisdom in Chicago that an entrepreneur needs to be friendly with the local alderman—if not a campaign contributor—in order to succeed. Corrupt aldermen can exact ransom for business licenses and building permits in the form of bribes and can exclude lower-income residents or the politically disfavored from their neighborhoods. Chicago has to overhaul this system if it wants to provide equal opportunities to all creative, courageous entrepreneurs.
It almost goes without saying that many entrepreneurs start their businesses in their homes. Indeed, nearly half of all American businesses are home-based.3 During a business’s initial trial-and-error period, before it starts generating money, it might in fact be foolish to rent commercial space. In a tough economy, people who are out of work often try to work for themselves from home. Other people’s ultimate goal is to work from home to make ends meet or to have more flexibility. In fact, home-based businesses are vital sources of income for people who want or need to be home tending to children or elderly family members.
A rising star among Chicagoan entrepreneurs provides a classic example of a business that started at home. Shawn Smith started making quirky plush toys for friends as a hobby when he was in school. The word started to spread and demand grew. With help from his wife Jen Brody, he began developing more characters and hand-sewing more and more toys. Eventually, they rented a bigger apartment to make room for a couple of sewing machines and the friends they occasionally hired to help out. Sales to customers and toy stores began to multiply. Now, the growing line of toys has expanded from a hobby to a full-fledged business, Shawnimals LLC, headquartered in a studio in the Kinzie industrial corridor. The characters that spring from Shawn’s imagination thrill fans on the web and shoppers around the country. They have been licensed out for comic books and a Nintendo video game. The company has several employees and has contributed to the growth of other businesses that make, sell and repackage its toys. By any measure, Shawnimals is a success story that started as a home-based business. Chicago should be happy to have such a business developing in its midst.
But, according to government decree, Shawnimals should never have happened. Chicago has a laundry list of strict restrictions on home-based businesses. For instance, no more than one person who does not live in the home is allowed to work there.4 And the manufacturing or assembly of products (like plush toys or dresses or greeting cards or jewelry) is not allowed unless they are sold at retail to customers right from the home.5 So, Shawnimals’ early sales to specialty stores were prohibited. But, the company could not have sold to customers very easily either: a home-based business cannot serve more than two customers at one time and no more than ten in a day, and, inexplicably, the law prohibits displaying products on shelves or racks.6 The business could never have gotten off the ground.
In addition, many other businesses would be ineligible for a home occupation license, such as any food preparation business, hairbraiding or teaching dance lessons.7 The Cosby Show’s Dr. Huxtable could not have even had his doctor’s office in a brownstone in Chicago, at least not with a separate entrance8 or a sign by the door.9
The City Council should revise the Municipal Code so that Chicago is a friendly forum for creative, home-based entrepreneurs, whether they are building computers in the garage and dreaming of becoming the next Bill Gates, or braiding hair for customers while keeping an eye on an elderly parent. Making products should be legal unless it creates a nuisance for neighbors in the form of excessive noise, smells or health hazards. Entrepreneurs should be allowed to sell those products to any customers, including resellers. And entrepreneurs should be allowed to display their products to customers and put signs up to allow customers to find them.
Brandi Cousins and Charvon Nicholson are bound together by more than a friendship dating back to their childhood as neighbors on Chicago’s South Side. The two young women are also passionate about handmade cupcakes, homemade ice cream, and the power of small businesses to change lives and neighborhoods. They graduated from high school at Dunbar Vocational Career Academy, went on to get associate’s degrees in culinary science and hospitality, and gained experience working in different food service jobs to prepare them for starting up their own dessert café in Chicago. By the time they came to the Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School to get legal advice, they had already formulated and taste-tested a menu for their café, to be called Ice Cream Please, that included unusual flavors of cupcakes and special theme packages for parties.
Cousins and Nicholson’s plan for moving forward was a classic example of starting small and bootstrapping: they intended to build their customer base and brand recognition by launching Ice Cream Please first as a catering business with a focus on cupcake packages for children’s birthday parties. In their initial meeting with the students and attorneys at the IJ Clinic, they explained that they would keep costs low by working out of their homes, and then would use their savings and their track record of revenues to get a small-business loan to open their café storefront in the South Side neighborhood of Bronzeville.
Little did they know that, despite their limitless enthusiasm and otherwise-solid plan for growth, the IJ Clinic would have to deliver some bad news; not only is making food for commercial purposes in a home-based kitchen illegal,10 but there are layers upon layers of regulations, inspections and ongoing reporting requirements at both the city and state levels for prospective food service entrepreneurs to navigate. The applicable rules and regulations governing a food service business are spread out over a large body of law. To get to the bottom of the question “what must I do to be legal,” even for a simple business such as a cupcake catering outfit, the entrepreneur must consult a panoply of sources: the Chicago Municipal Code’s licensing title,11 the Chicago Municipal Code’s health and safety title,12 the Illinois Sanitary Food Preparation Act,13 and the Illinois Administrative Code,14 as well as other laws that are not specific to food services.
All told, it is reasonable to expect an exhaustive review of these sources alone to take dozens of attorney-hours, not to mention the time necessary to research questions presented by vague or ambiguous language in forms and applications. Translating these hours into the cost of reasonably priced private legal services means that conscientious entrepreneurs like Cousins and Nicholson would need to set aside a minimum of $25,000 in addition to their other start-up expenses. It is not surprising that the dizzying array of requirements makes for a far more expensive and complicated recipe for launching a business than most entrepreneurs can stomach, particularly those whose most valuable (or only) asset may be their recipes or unique know-how.
After learning about the possible penalties and fines for baking their cupcakes in their home kitchens, Cousins and Nicholson considered renting space in a communal commercial kitchen. Communal commercial kitchens are designed to meet all the city and state standards for health and sanitation and can be rented by the hour or day by aspiring entrepreneurs. Although the city still requires each entrepreneur to get a separate business license and food sanitation manager certificate, and to undergo health inspections for his or her operation in the commercial kitchen, the arrangement can be more affordable for someone who is starting a food venture part-time. Unfortunately, there are very few such facilities in Chicago and prices are relatively high. When the young women did the math, they could not find a way to make leasing even a small space in a commercial kitchen work.
This story is familiar to other food service entrepreneurs. Katrina Markoff, the Le Cordon Bleu-trained founder of Vosges Haut-Chocolat® who has built a worldwide brand and garnered numerous awards, started out in the kitchen of her North Side apartment. Markoff had researched using a commercial kitchen or a co-packer to make her chocolates legally but came to the same conclusion as Cousins and Nicholson: it was too expensive. Instead, she took the risk of incurring citations and fines by operating from home. According to Markoff, she “did everything herself”—piling boxes for chocolates in her apartment, assembling packages on her dining room table, making her trendy labels at Kinko’s, and driving her chocolate delicacies to retail outlets in her car.15 This strategy worked: slowly she built up brand recognition and an extensive clientele, and was able to rent production space in the city. Now, Vosges employs more than 50 people in Chicago and has six retail locations. Says Markoff: “I started illegally because that’s what I needed to do to see whether the business was viable. That’s why people start out at home.”
Something must be broken in Chicago’s system if the only way a fantastic corporate citizen like Vosges can start is by breaking the law. It is impossible to know how many possible success stories like Vosges are squelched before they can start because their owners could not or would not risk flaunting Chicago’s rules. And, when businesses like Vosges and Ice Cream Please go underground, everyone loses out: consumers cannot count on the protection of health laws, the city does not collect tax revenues, and entrepreneurs may be hesitant to expand and effectively market themselves because they will be fined if they are discovered.
Rather than continue this counterproductive cycle, the city must reduce its licensing fees for retail food establishments and reevaluate its requirement that food service businesses operate exclusively out of commercial kitchens. As long as an entrepreneur is willing to submit to health inspections for his or her home-based kitchen, the benefits of legitimizing the widespread phenomenon of home-based food production are clear. The city and state must also work together to streamline and coordinate the layers of regulations of food service businesses: the current maze of regulation is a grave deterrent for conscientious businesses that we want to succeed in our communities.
Recipe for Opening a Cupcake Business in Chicago
A commercial kitchen that meets all applicable state and city health standards
33 hours and $260 for an approved food sanitation manager certification course1
$35, payable to the city, for Food Sanitation Manager certificate2
$660 (or higher3) for two-year retail food establishment license4
Affidavit for Department of Business Affairs and Licensing
Limitless patience and perseverance to work through Chicago’s bureaucratic maze
1. Don’t even think about starting your business in your own kitchen, no matter how clean and tidy it may be.
2. Rent or build a commercial kitchen in a properly-zoned space for a retail food establishment business.
3. Prepare retail food establishment license application to submit to the Department of Business Affairs.
4. Provide the city Department of Health with extensive information about the business’s activities, conditions of its equipment and the facilities used for conducting the business.5
5. Verify that business had a valid building permit for any structural, plumbing, electrical or ventilation changes made to the space.6 File Affidavit listed in “ingredients” above.
6. Pass inspections of kitchen, vehicles, and all equipment and facilities for compliance with the Municipal Code of Chicago and the rules and regulations of the Board of Health.7
7. Ensure that someone who has a valid Food Sanitation Manager certificate is present at the establishment at all times when food is being prepared or served.8
8. Comply with all sanitary condition regulations of the Chicago Municipal Code and the associated Department of Health Regulations—such rules cover topics that range from “control of vermin and insects”9 to stipulations that, before an entrepreneur remodels or makes “any major alteration or replacement of existing equipment,” he must submit “plans or complete drawings” of the relevant changes to the Department of Health for advance approval.10
9. Comply with food service sanitation requirements included in the Illinois Administrative Code,11 as well as the Sanitary Food Preparation Act.12
The Fine Print
1 The city must approve food sanitation certification courses. See Chicago Municipal Code 7-38-012(a). For information on one such approved course, see, e.g., http://hwashington.ccc.edu/fscertify.asp?section=pgms&navpage=fsscert
3 See Chicago Municipal Code 4-5-010. The fees for a two-year retail food establishment license range from $660 for locations under 4,500 square feet to $1,100 for locations more than 10,000 square feet.
4The definition of a “retail food establishment” is very broad: it includes “catering kitchens” as well as a laundry list of other food service businesses: “restaurants, coffee shops . . . industrial feeding establishments . . . dressed poultry markets . . . ” etc.
See Chicago Municipal Code 4-8-010.
5 See Chicago Municipal Code 4-8-030(a).
6 See Chicago Municipal Code 4-8-030(c).
7 See Chicago Municipal Code 4-8-030(b).
8 See Chicago Municipal Code 7-38-012(a).
9 See Chicago Municipal Code 7-38-020.
10 See Chicago Municipal Code 7-38-035.
11 See Ill. Admin. Code Title 77, Sections 750.5 to 750.3300.
12 See 410 ILCS 650/2 et seq.
People who want to make a living in a straightforward way take products right to customers. Selling food and merchandise to commuters and tourists in the city is one of the most fundamental forms of entrepreneurship. It is sometimes the only choice for poor, uneducated people who want to support their families in hard times.16 Street vending is also a good option for entrepreneurs who are only able to work during limited hours or days of the week, and may not want to rent a permanent space. But getting permission from Chicago to sell anything in this way is far from straightforward.
To go from place to place selling merchandise or fruits and vegetables, an entrepreneur must obtain a peddler’s license.17 The license fee is $165 every two years (or $88 for a senior citizen, veteran or disabled person).18 However, even with a license, peddlers are not allowed to sell their wares in prohibited districts. The Municipal Code contains a list of prohibited districts that goes on for pages.19 A peddler would have to be an expert in cartography to translate all the boundaries and restrictions into a map that could provide actual guidance. After all that work, she would find that there is not much of the city left after all the prohibited districts are eliminated. Especially significant, the “Central District,” including the entire Loop and the Magnificent Mile, are off limits. A street vendor is not allowed on the streets where the most people are. And the other prohibited districts are a random assortment of locations closed to peddlers by an alderman’s fiat.
The law dampens Chicago’s vibrancy. It means that artists cannot sell paintings in front of the Art Institute,20 even though the U.S. Court of Appeals held in 2002 that the city cannot constitutionally prohibit the sale of expressive goods like paintings, books or slogan t-shirts, which are forms of speech protected by the First Amendment, just because it speculates that peddlers disrupt traffic.21 But the city made only minor changes to the law, and so-called speech peddlers are only allowed in a few spots when they have made arrangements well in advance.
Chicago’s law on peddling also means that traditional eloteros selling ready-to-eat corn-on-the-cob or fruit cups are breaking the law, even if they are in permissible districts.22 Food cannot be “prepared” on the street, and peddlers are only allowed to sell whole, uncut fruit or vegetables. To sell prepared food, entrepreneurs need a different, more expensive license, and they would have to prepare the food in a licensed kitchen, as explained above. Last year, the city told the Tribune that it had received only 35 complaints regarding food vendors but it issued 560 tickets.23
Finally, in the most bizarre and mystifying twist, Chicago flatly prohibits vendors from selling flowers.24 It is impossible to imagine an acute health or safety risk that justifies outlawing flowersellers. The City Council has no place prohibiting people from making a living in this time-honored way.
The city should open up to vendors. The city should likewise nurture speech protected by the First Amendment and exempt artists and authors from these tight restrictions. It should allow a vendor to cut or peel fruit for a customer, and, for heaven’s sake, it should allow people to sell flowers wherever other goods can be sold.
Child Play Centers
In a diverse and growing city like Chicago, affordable services for children are essential to make the city livable for families. Yet, the city treats a small business where parents or nannies can bring children to play with other children like an enormous threat to the community that must be suppressed by the most stringent measures.
Esmeralda Rodriguez is just the kind of doer that makes Chicago tick: she understands what urban families need and she wants to make a living fulfilling that need in the best way she knows how. After working with the Chicago Park District for 13 years designing successful programs for young children, Rodriguez decided that she could serve more children with more flexibility by striking out on her own. She and her husband saved a small nest egg of start-up money, and Rodriguez worked hard to write a business plan that lays out her vision of dividing a children’s play space into a stimulating theater play area, a library for storytime, and a recreation area with lots of toys and games for children ages six months to six years. She found an ideal storefront for the business, signed a lease, and began the process of applying for the appropriate business license.
Unfortunately, that is when things got tough for Rodriguez. She went to the city’s Department of Business Affairs and Licensing (DBA) to meet with the business consultants, who are trained to help entrepreneurs navigate the complexities of getting licenses for their enterprises.25 Rodriguez explained her planned activities, and was told that she would need to pay $770 to obtain a Public Place of Amusement (PPA) license and, once she opened her business, she would be required to charge her customers a special tax. Disappointed but undaunted, Rodriguez began assembling the following documentation necessary to complete her business license application:
- The names and personal information of all owners and managers/operators of the business,26
- If the premises are leased, a copy of the lease and the personal information of the owner(s) and manager(s) of the property,27
- A copy of each agreement for the management of the operations of the licensed business,28 and
- Seating capacity of the property and the floor area or ground area of the premises.29
Particularly problematic is the requirement that the applicant for a PPA license provide a valid lease for the premises—this means that an entrepreneur like Rodriguez has no choice but to take a high-stakes gamble that the city will approve her license application. This gamble is not just risky but also can drain the savings of all but the most deep-pocketed entrepreneurs: the PPA license approval process can take months, during which time rent must be paid but the business remains shut. And those who are so frustrated that they consider beginning operations illegally face another gamble: the fine for operating without a PPA is among the highest in the Municipal Code: $10,000 that may be assessed daily for businesses that do not shut down after getting their first citation.30
In case the documentation listed above is not onerous enough, Rodriguez discovered that she was required to supply additional materials when she was presented with the DBA’s actual PPA license application form. She was instructed to include with the application a business “site plan” (which is, according to the license application, “a detailed diagram of the business site including outside dimensions, entrances/exits, parking and address”), an “internal floor plan” that includes “all dimensions of tables, kitchens, bathrooms, etc.,” corporate minutes documenting the election of corporate officers, corporate stock certificates, and an organizational chart of the corporation or business entity applying for the license, among other requirements.31
It was at this point that Rodriguez sought out free legal assistance from the IJ Clinic on Entrepreneurship — she had no idea how she would get the paperwork necessary for her application together, let alone gather it in a timely fashion while her rent payments continued to come due. And, while the IJ Clinic could help her with the license application itself and the documentation about her Illinois corporation, the site plan and the internal floor plan continued to cause delay, because Rodriguez struggled to find an affordable architect. Sadly, her ordeal with the city’s license requirements had only just begun.
Child play centers like the business envisioned by Rodriguez create space for children to play together while accompanied by their adult caregivers. They are especially important in cities like Chicago where inclement weather keeps kids cooped up for many months of the year, and everyone gets cabin fever stuck at home. Child play centers are not day care centers where children are dropped off.32 Shockingly, however, the city treats them like sports stadiums and strip clubs, instead of like toy stores or music schools, because they charge an “admission fee” and offer “amusement” to their customers.33 These features require them to obtain a PPA license.
Under the Municipal Code, the definition of “amusement” includes any exhibition or performance—including, as noted by the statute, an “animal or poultry show”—as well as “any entertainment or recreational activity offered for public participation or on a membership or other basis.”34 Large concert halls and stadiums for sporting events are covered by this license category,35 and each PPA must charge its patrons an “amusement tax” in the amount of 8 percent of admission fees.36 A survey of recent PPA licenses granted to applicants confirms that the majority of PPA licenses are granted to music venues, billiards halls, bars, lounges and the occasional gentleman’s cabaret.37 For someone like first-time entrepreneur Rodriguez, the difficult application process for the PPA license is likely to pose insurmountable roadblocks to providing a valuable community service.38
Rodriguez is not the only laudable entrepreneur who has faced the trials and tribulations of applying for a PPA license for a child play center. Rick Miller, the owner of Day Frog, a child play center now located in downtown Chicago, endured a bureaucratic ordeal that brought to light the absurdity of applying PPA regulations to child play centers. Miller wanted to open Day Frog just off Chicago’s Magnificent Mile and across from Northwestern Memorial Hospital to benefit families living downtown, tourists with young children and families visiting patients in the hospital—in all cases, a space where kids could romp and make as much noise as they wanted . . . a facility that would be in high demand. His license was denied because PPAs cannot be located within 200 feet of any church, hospital or school. As Miller pointed out, “If I was a day care center, I could be right across the street from a hospital. But, because parents are actually present with their children, it can’t be near a hospital. That, to me, is an inequity in the law.”39 Only after enlisting the support of a prominent Illinois lobbyist, his local alderman, and other influential players in city politics was Miller able to get a license—after the Committee on Licensing and Consumer Protection changed the Municipal Code to allow “children’s development centers” to be located near hospitals, schools or churches.40 But, the Committee did not exempt child play centers from any other PPA requirements.41 Other entrepreneurs who dream of providing a fun outing for kids and caregivers but lack the resources, know-how and connections to wage a campaign lobbying City Council, are practically doomed by the other pitfalls embedded in the PPA license process.
The PPA application process also sprung a trap on Lorena Franch. The converted warehouse space she leased for a child play center in the West Loop neighborhood seemed to be properly zoned and perfect for her business, KidCity. Like Rodriguez, she began the process of getting a business license and learned that she needed to be licensed as a PPA. Six months later, she is frustrated and is considering closing KidCity because of an unexpected problem: the zoning department requires PPA’s to provide a substantial amount of off-street parking.42 Franch found a parking lot nearby to rent, but was informed that she would have to pave the gravel surface at her own expense in order to pass the inspection. Franch stated about her ordeal: “I have been shocked throughout the process. The city has been treating me like I am a strip club or sports center, but I am just trying to open a space that benefits the neighborhood and provides families with a social place to meet and play.”43
Nothing demonstrates how inappropriate it is to treat child play centers as PPA’s better than the public notice requirements that are part of the PPA licensing process. According to the relevant section of the Municipal Code, within five days of submitting a completed application for a PPA license to the Department of Business Affairs and Licensing (which, as discussed above, is a time-consuming and expensive task in itself), a number of steps are still required.44 First, the DBA must send written notice of the application to the alderman of the ward in which the proposed PPA is located.45 Second, the DBA also must send written notice of the application to all legal voters residing within 250 feet of the location for which the license is sought.46 This notice must state that voters have 30 days to file a petition with the DBA requesting that the license be denied on any of the following grounds:
- “Substantial injury to the value of the property in the neighborhood” of the proposed business would result;
- The proposed business would have “an adverse effect on other commercial or industrial enterprises in the surrounding area”;
- The proposed business would have “an adverse effect on traffic-flow or parking within the surrounding area”; or
- The proposed business would have “an adverse effect on the character of the surrounding neighborhood because of the hours or operation of use.”47
In the event that a petition, signed by a majority of qualifying voters, is received by the DBA within the proper time frame, a public hearing must commence within 30 days.48 Finally, notice of this hearing must be (a) mailed to the license applicant, the voters listed on the petition, and the alderman of the ward in question; and (b) published in a daily newspaper of general circulation.49 At the hearing itself, the director of the DBA may deny a PPA license “upon a showing of due cause” for any of the grounds listed above.50 The rule fails to provide any standards for what a showing of “due cause” entails, nor does it delineate what kind of rights the applicant has or does not have to make a case. Denials may be appealed to the DBA’s adjudication division, but no time frame is provided.
In case these burdensome public notice requirements do not sufficiently dampen an entrepreneur’s can-do spirit, the entrepreneur must also get approvals from myriad other city departments, including the buildings commissioner, the zoning administrator and the bureau of fire prevention.51 The relevant departments are required to forward their determinations to the mayor within 21 days of receipt of the application, but it is unclear whether this is realistic because extensions are allowed in the event that any “other information [is] requested of the applicant by any department whose approval is necessary.”52 The mayor then has 14 days, which he may extend by another 15 days, to deliver a final determination of whether the subject property and the applicant itself complies with all provisions of the code.
Taken together, the seemingly endless series of steps in the PPA licensing process is enough to keep all but the most resourceful entrepreneurs out of the child play center business. Even assuming that one could assemble the documentation to submit the application to the city on Day 1 (a step that Rodriguez found takes months in itself), at least two months must pass before a license is granted. During this interim, the business is unable to open and earn any revenues to cover its rent or other expenses.
This regime, which places burdens on small-business owners that are vastly disproportionate to the potential negative effects of their enterprises, is counterproductive and must be changed. Although the exception to the zoning regulations that was enacted last year for “children’s development centers” near hospitals, schools or churches represents a step in the right direction, it is merely a patch on a system of regulation that is broken. Child play centers, like playgrounds or recreation halls in schools or churches, carry with them virtually none of the risks that arise in regard to places of amusement catering to adults, particularly those that involve alcohol sales and nighttime operations. Child play centers should be exempted entirely from the public place of amusement regulations. Safety and health inspections mandated under other sections of the Municipal Code would suffice to protect children from potential play hazards and the entire community would be better off. Children would have safe and stimulating places outside their home to play, socialize, and exercise while being supervised by their caregivers, families would have access to affordable recreation for their children, and the city would have more thriving businesses that in turn make the city inhabitable for growing families.
Retail Computing Centers
The “digital divide” is a fundamental issue facing inner-city communities that seek to compete in today’s knowledge economy. Households in low-income urban neighborhoods are less likely to have personal computers at home, and entrepreneurs who provide access to computers, software and training are a great community asset. Chicago should be encouraging businesses that allow people to develop computer skills, type resumes and search for jobs online. Instead, the city stymies businesses that provide such services, either as a stand-alone computer center or as part of a neighborhood café or bodega.
David Lane, a former client of the IJ Clinic, is an example of an entrepreneur who was prevented from pursuing his dreams of opening a computing hub in underserved communities by the city’s regulations.53 From a young age, Lane was fascinated by computers and eventually pursued training in technology education. Growing up in a minority community in Chicago, he was amazed by “how many of my family and friends didn’t know anything about computers, and were always calling me for help. I would help them, of course, but it struck my mind—wait a moment, this is probably going on elsewhere in the city! That’s when I looked into the issue more, and I understood that there was a real need for people to learn about computers.”
Lane managed to find a location for the business he envisioned, where people, young and old, could come to take classes about computers and then use them at reasonable rates. On the edge of the hardscrabble Englewood neighborhood, he went into business with another entrepreneur who specialized in selling ink and printing services, and they decided to set up a few computers in the store. Says Lane: “People would come in, buy their ink, but they would really want to learn to use the computers. We ended up partnering with a community-based organization down the street, which would send groups of people to take classes from me. We saw that it was both lucrative and it was filling a need in the community, so we were thrilled.”
But when Lane and his partner looked into what they would need to do to get the appropriate license for their business, they began to think twice. Under the Chicago Municipal Code, any business that qualifies as a “retail computing center” must obtain a special license that is difficult if not impossible to legally maintain. The definition of a retail computing center is broad, and covers any business that has three or more computing workstations that are “held out to the public for a fee” for either (a) the rental of computer access or (b) computer training.54 If an entrepreneur is planning to have workstations that meet this definition, he or she must take two baffling steps to obtain the appropriate license. First, after complying with the general requirements of the Code for obtaining a business license (filling out a business license application form, registering for an Illinois Business Taxation number, etc.), the entrepreneur must provide a sworn statement as to the number of computer workstations that are located or will be located on the premises of the retail computing center.55 Second, the entrepreneur must include in the statement a list of all of the computer applications available on the workstations.56
These requirements raise myriad questions that are not answered by the code and are completely out-of-step with the reality of computer and software technology. What if the applicant is not sure how many computer workstations he or she will eventually have on-site? Many small businesses grow organically, starting small and becoming larger as time and revenues allow. Should the applicant list the number of workstations she initially plans to operate, or attempt to estimate the number that she might operate in the future? Will the license need to be amended to reflect the actual number if a forward-looking guess turns out to be wrong? The Code is silent on these questions.
The required list of available applications presents similar, but potentially more difficult, problems. As technology is constantly changing, a successful entrepreneur will need to alter the mix of software available to customers. Each time new software programs are added (or old ones removed) does he or she need to notify the DBA and seek to amend the documents supporting his or her retail computing license? What about updating software versions, a nearly daily process? Again, the Code has no answer, and such vagueness in the code is likely to cause an entrepreneur to hesitate before plunging into the regulatory morass.
Worse, however, are the ongoing pricing rules and reporting requirements that limit the entrepreneur’s choices about what software programs to offer and how to charge for the service of using the computers and software. For example, the Code requires that:
(1) a majority of the menu selection categories available to customers are dedicated to applications for business, personal computing, education, communications services and internet access; and (2) the licensee does not advertise that games are available on the computing stations; and (3) the actual use of the computing stations within the licensed location for the playing of games is not more than 25% of the use of the stations per month.57
Additionally, retail computing center licensees must maintain an electronic record of the use of each workstation that details “which applications are employed by the user and the length of time that each application is used.”58 The provision makes it illegal to “manipulate, delete, or tamper with the electronic record.”59 Beyond the fact that the government has no business monitoring the content of computers in private use, keeping such copious records on the computing activity of each customer with respect to each application used is extremely difficult, and the lack of prescribed timeframe for keeping such records makes compliance even more costly for entrepreneurs like Lane and his partner. As a result, the business partners tried to think creatively about how they might price their offerings to cover their bureaucratic costs while still turning a profit.
Sadly, no amount of creative thinking—the hallmark of savvy entrepreneurs—could solve Lane’s problem. Without explanation, the code declares that the fee for use of a computer workstation be “based on the duration of customer use, without consideration of the type or number of applications used by the customer.”60 Such restrictions on freedom of contract are unusual (and in some cases, unconstitutional), especially for businesses that lack a history of consumer exploitation or where the restriction is too broad in addressing exploitation. Instead, the market should determine what type of pricing is most appropriate. While a flat-rate charge based on usage time may be preferable to some customers, others, especially in niche markets, may prefer to pay based on the applications they actually use. Regardless, the effect of Chicago’s mandatory pricing scheme is to force those who use run-of-the mill, less costly applications to subsidize the use of specialized software programs, such as photo or video editing suites, by a select few. Realizing this, and being unable to create a menu of discrete prices that corresponds with the varying needs of different users, many retail computing center entrepreneurs may forgo the purchase of specialized programs altogether. This not only limits consumer choice at the retail computing center level, but may block users from ever being able to access the applications they need when rental of the software is their only economically viable option.
When Lane and his partner realized that they had almost no leeway to craft their pricing menu as they saw fit but would have to shoulder the heavy reporting costs, they decided against applying for the retail computing license altogether. Unfortunately (but predictably), one day an inspector from the city walked in, looked around, and cited them for operating illegally. Lane and his partner got a few citations and had to pay a minimum fine of $250 per citation,61 but they knew that if they complied with the retail computing center ordinance, they would go out of business. After some soul-searching, they decided to shut down their business rather than comply with the licensing rules and reporting requirements. Currently, Lane is looking to use his computer-education skills by teaching classes at already-licensed retail computing centers, public libraries and community centers that have computing resources available, but he has had trouble locating outlets that can accommodate him because of their own government-imposed expenses.
For the benefit of lower-income Chicagoans who do not have the resources to purchase a home computer or expensive software, the city should revisit its retail computing center regulations. Keeping onerous and out-of-date recordkeeping requirements on the books simply encourages noncompliance and drives entrepreneurs like Lane underground and, eventually, out of business. And the requirement that a flat time-based fee be charged rather than a variable fee based on the applications used by the consumer is indefensible—not only does it abridge the individual entrepreneur’s economic freedom, but it has the effect of hurting precisely those consumers who need basic computer training or access to word processing and the internet and cannot afford computers at home. The end result is that, where there could have been a thriving business teaching inner-city adults and children skills that are crucial to their futures, there is nothing. And that is something that Chicago should seek to change.
Commercial Parking Restrictions
Many self-employed people and small businesses serve customers directly in their homes and businesses all over Chicago. From landscapers to florists to plumbers to janitorial service providers to handymen, they deliver their services right to their customers’ doors. They need to drive their equipment and deliveries to their customers, but the city has rules that burden them all. Chicago prohibits parking business vehicles on the street. As a result, these productive, small businesses must pay a king’s ransom in parking tickets when they park near customers or near their own homes.
Chicago’s parking regulations flatly prohibit any commercial vehicle (including any car marked with a business name or carrying merchandise or supplies) from “parking on any business street or residential street in the city for a longer period than is necessary for the reasonably expeditious loading or unloading of such vehicle.”62 So, the Geek Squad cannot park on the street while fixing your computer, a landscaper cannot park on the street while manicuring a lawn, and a florist cannot park his van in front of his apartment building at night. It is a mystery how self-employed tradespeople are supposed to function at all.63
In practice, they do function, but they pay a high price. Not only is a violator of the commercial parking restrictions subject to daily fines of $125 (one of the highest parking fines in the Municipal Code),64 but the vehicle is subject to immobilization and impoundment “without prior notice or placement on an immobilization list.”65 One too many boots, and a talented tradesperson might decide being in business is simply not worthwhile.
Take Tim Tindle, who has been self-employed as a junk hauler in Chicago for more than two decades.66 Tim contracts with homeowners or businesses that need their junk hauled away, and he sells useful scraps to junkyards. His business helps keep the city clean and promotes the reuse of resources. Unfortunately, Tim’s livelihood was threatened by Chicago’s hostile parking restrictions. When he was starting out in the 1980s, he parked overnight on streets where there were plenty of spaces for residents, but over a few months he received a ticket almost every night and soon had accumulated about $7,500 in fines. Before he could get together the money to pay them, Tim’s driver’s license was suspended, so he could not work. In the end, he resorted to filing for personal bankruptcy so he could get a valid driver’s license and get back to work. Now, Tim parks his truck in a commercial parking lot overnight, at the price of $2,400 a year. Still, he risks a ticket every time he parks his truck somewhere while he works or eats during the day.
Some businesspeople in certain parts of the city are allowed to park in front of their homes if their aldermen give them a special permit.67 But this technicality hardly solves the problem for laborers, as Matt Tindle, another self-employed junk hauler, learned to his dismay.68 After getting a number of $125 tickets, he made the rounds of different city offices to try to find out exactly what the Chicago Municipal Code required him to do to park legally. But, he said, “everyone will tell you a different version of the law. If you want clear information, you’ll have problems getting it. I went to the Department of Streets and Sanitation, police stations, the Department of Revenue, my alderman’s office, city clerks in other departments, and they all told me different things.” When Matt learned about the limited exception that might allow him to park his vehicle outside his residence in the Portage Park neighborhood with a permit granted by his alderman, he was temporarily thrilled. However, his ward is not covered by the exception, and his alderman was unsympathetic to his plight. “The law,” says Matt, “is targeted towards working people [like me].” As a result, Matt spends a significant amount of money each month to rent a private garage space but still worries about what to do with his truck when he is working on-location at jobs during the day.
Presumably, the purpose of these commercial parking restrictions is to prevent commercial vehicles from monopolizing all the street parking. But, as usual, the city has overreacted by prohibiting all commercial parking, with very few exceptions. Although a large business is likely to have off-street parking alternatives when the vehicle is off-duty, a small business or sole proprietor often will not. Instead, the city could allow small-time entrepreneurs to park near the driver’s home or near customers without causing any disruption.
Chicago’s draconian parking regulations act as a tax on tradespeople, and they make it difficult for entrepreneurs to enter the most basic occupations. They privilege the aesthetic sensibilities and convenience of white-collar residents—whose trendy SUVs may well outsize prohibited commercial vehicles—over the ability of ordinary people to work for a living. People who use cars, vans and pick-ups in their work must be allowed to park near customers and near home without incurring costly parking tickets or begging permission from aldermen. Chicago needs to welcome the workers into their customers’ and their own neighborhoods to encourage entrepreneurship and self-sufficiency.
Entrepreneurs in Chicago have to fight City Hall, but that is not all. The state of Illinois has its own set of rules governing who can enter what occupation. Most of the time, people have lobbied for the state to treat their work as a “profession,” which requires testing and oversight by a board of experienced practitioners. As a result, they can keep insiders in and potential competitors out. People who envision a new, more efficient, or less expensive way of getting the work done are not allowed to compete unless they learn the old way of doing things first and get the approval of the established businesses. The delay and expense of the certification process makes it hard for them to charge their customers less. Or they operate in secret, without certification. This “professional regulation” has grown dramatically. In the 1950s, only one in 20 occupations—jobs that don’t require a great deal of education or investment to enter—required a government-issued license; today that number is closer to one in five.69 And licensing is often not designed to protect the public: it merely protects existing service providers. People with talent are denied their right to pursue their calling.
The beauty industry in Illinois (and across America) is notoriously over-regulated. Trade associations lobby state legislatures to make it difficult for new talent to set up shop. They convince lawmakers that health and safety are at stake, and that no one could possibly give a safe hair cut or paint nails without hours upon hours of schooling, certification and continuing education. The laws are shaped by people who have a clear interest in keeping business for themselves, rather than opening the occupation to competition, especially competition that would charge lower prices.70 Oftentimes it seems as if the laws are driven not by real concerns about public safety, but by the schools that make more money if they are the gatekeepers for the occupations. It turns out that the beauty industry is tough on some immigrant groups too. English or Spanish skills and an approved education are required to get a license to ply trades that might otherwise provide wonderful opportunities for immigrant entrepreneurs.
To become a barber in Illinois, that is, to shampoo without supervision, shave, style or cut hair legally, one must graduate from a barber school with at least 1,500 hours of study or graduate from a cosmetology school and also complete an additional 1,000 hours at a barber school.71 The schools must be approved by the Illinois Department of Financial and Professional Regulation (DFPR). Finally, one must pass a written examination, which is offered only in English or Spanish in Illinois. Sample questions on the DFPR’s web site include identifying the type of spore formed by anthrax and tetanus bacilli (answer: “Spherical”) and the distinguishing feature of French-style shears (answer: “have a finger brace”). The Department can—and frequently does —refuse, suspend or revoke a license if someone has a felony conviction, so barber school is a risky investment for someone coming out of prison and trying to make his way in the world. Working as a barber without a license can result in fines up to $5,000.72
One poignant story is revealed by a 1980 court case. Michele Citrano, an Italian by birth, had already been a barber for 17 years when he immigrated to Chicago. He went to look for work in a barber shop, and he was told he would need a license. A friendly barber filled out the paperwork for him, listing people Citrano did not know as character witnesses. Somehow, Citrano took the written examination. And he proceeded to live the American dream, working in a barber shop downtown in Chicago and buying a home in the suburbs where he lived with his wife and children. But five years after he got his license, the then Department of Registration and Education revoked it, because the Barber’s Committee claimed that the character witnesses were not genuine and that Citrano did not have the English skills to have passed the exam without improper assistance. In an extraordinary sequence of events, Citrano took his case to court, and the court determined that it was arbitrary and capricious to revoke the man’s license when the complaints against him had nothing to do with his good character or barbering skills. The appellate court confirmed.73 It is impossible to know how many skilled immigrants like Citrano never meet a friendly soul to help them figure out the system, how many give up when they find out about an exam in English, or how many surrender to the government’s efforts to strip them of their rights because they cannot afford a lawyer. It is impossible to know how many talented, hard workers are locked out of trades because they do not meet requirements that a thoughtful judge would declare arbitrary and capricious.
The state of Illinois should not require 1,500 hours of schooling and a character review for barbers because it is not necessary to protect public health. Customers should be able to decide whether they want to seek out barbers who are trained in all the latest styles and techniques. The government does not need to require it.
There are many African hairbraiders in Chicago in Citrano’s position: they have developed their skills outside the beauty school system and often outside the country. All-natural techniques to braid and lock hair are passed down through the generations. And for many years, braiders in Chicago served satisfied customers without needing special degrees or licenses displayed on the walls of their shops. But the Illinois Cosmetology Association didn’t like the competition, and beauty schools wondered why they were not getting a cut. In 2001, the Illinois Cosmetology Association pushed through a change in Illinois law that made braiding the practice of cosmetology.74 All of a sudden, braiding without a degree and a license was illegal. Lots of traditional braiding shops received cease and desist letters from the state of Illinois, and many braiders closed up shop, some to braid in underground businesses.75 Now that braiders need cosmetology licenses to braid hair legally, regardless of their experience, they must complete 1,500 hours of schooling (costing at least $7,000 or $8,000) and pass a written exam either in English or Spanish.76 Even beauty school directors admit that they do not teach much if anything about all-natural braiding77 so it is difficult to argue that the schooling makes people better braiders. It is questionable whether it even makes them safer braiders, because they do not use chemicals or machines that pose risks to health or safety. Rather, it just makes them poorer braiders (or, alternatively, pricier braiders), because they have to spend thousands of dollars on school and lose a year of work to get the irrelevant degree.
These laws requiring braiders to acquire so much useless training do nothing to protect the public and constitute an unconstitutional attack on braiders’ freedom to work.78 The law was fashioned purely to protect established beauty parlors from competition. Yet, the Illinois Supreme Court has held before that a safe occupation should not be prohibited to protect license-holders from competition: “No citizen should be legislated out of his trade and have it awarded to another craft under the garb of a health measure where it is not definitely related to such measure.”79
Getting a license is not, however, the only new requirement for braiders. Most surprising, now that braiders are considered cosmetologists, they must complete at least 14 hours of continuing education classes every two years.80 They can lose their licenses if they repeatedly fail to meet the continuing education requirements.81 The DFPR more often puts cosmetologists on probation and fines them hundreds of dollars because they failed to complete continuing education courses. If those braiders could fight back like Citrano did, perhaps an insightful judge would point out that they are doing good work without the continuing education classes, and their safety records are not in doubt: their licenses to work should not be in doubt either.
It is mind-boggling why Illinois would require braiders or any other hair stylists to take classes on an ongoing basis. If government needed to ensure they knew about new information that was vital for customers’ safety, it could ask all licensees to certify that they read a pamphlet about the information. Instead, it requires them to pay for classes of their own choice. Classes do not even have to cover issues related to health and safety.82 The DFPR might argue that it is making sure the cosmetologists in Illinois are high-quality. Customers—not bureaucrats—should decide whether braiders are doing a good job. As one cosmetologist anonymously said, the only truly credible explanation for the continuing education requirements is the fact that it is a racket for the schools who offer the classes.
Illinois does not need to police who braids hair or whether hair stylists take regular classes. Requirements should be limited to include only those necessary to ensure public safety. Customers should decide who is a talented, knowledgeable hair stylist.
Nail technicians are also subject to arbitrary and unconstitutional requirements. They must complete 350 hours of training, costing anywhere from $2,000 to $3,000, must pass a written examination and must complete 10 hours of continuing education every two years.83 The written examination is offered only in English or Spanish, which is particularly troublesome because nail care has historically been a vital occupation for immigrant women, especially those from Vietnam. Vietnamese people constitute 43 percent of nail technicians nationwide.84 Exam questions that cover basic knowledge about hygiene, vocabulary and nail care techniques are arguably related, in part, to health and safety. Someone who passes that test should be allowed to work as a nail technician. But the requirement of 350 hours of schooling and continuing education requirements seem to serve no purpose related to protecting the public. They only protect the nail schools’ bank accounts.
What if the government prohibited you from truthfully telling potential customers what you do for a living, even though your work is perfectly legal? If you could afford to pay a constitutional lawyer, you might bring a lawsuit on First Amendment grounds. However, if you were an ordinary entrepreneur who dreams of building a healthy business but cannot afford a legal battle, you would be in the same situation as many landscapers in Illinois.
In Illinois, no one may “represent himself to be a landscape architect or use the title ‘landscape architect’, ‘registered landscape architect’, or any other title which includes the words ‘landscape architect’,” unless he or she has registered with the state under the Illinois Landscape Architecture Act of 1989 (the “Act”).85 In order to register as a landscape architect, one must meet a number of requirements found in the statute and the regulations drawn up by the DPFR: an “approved professional degree in landscape architecture from an approved and accredited program,” “practical experience in landscape architectural work” and a passing score on the state’s written examination covering “technical and professional subjects” related to landscape architecture, among other requirements.86
As a result, landscape professionals in Illinois who are not registered “landscape architects” are very careful not to call themselves landscape architects, as they could incur a fine of up to $5,000 and other penalties.87 As one landscape designer explained, “I do many of the same tasks that a landscape architect would do, but I am extremely careful about making sure that none of my professional materials use the word ‘architect.’”88
Restrictions on what a businessperson can call herself, called “titling acts,” are not only unconstitutional censorship of truthful commercial speech,89 but they have generated no positive evidence of consumer benefit by reducing confusion or fraud. Moreover, according to anecdotal data from landscape professionals and trade associations such as the Illinois Landscape Contractors’ Association and the Illinois Nurserymen’s Association, as well as a systematic review of DFPR enforcement reports from the past three years, there has been no recorded enforcement of the Act in Illinois.90 But enforcement is only half the story.
Titling acts chill truthful, constitutionally protected speech, and often they are used as stepping-stones toward more insidious legislation. Once people are used to a titling act, states often pass a law making it illegal to work in an occupation without receiving a license from the state. (These are called “practice acts” in contrast to “titling acts.”) For example, interior design titling acts in a number of states have paved the way for tougher practice acts that prohibit anyone without a government-issued license from doing any sort of work that could be characterized as interior design.91
Led by the landscape architecture trade association, called the Illinois Chapter of the American Society for Landscape Architecture (ASLA), there has been a concerted effort to pass a practice act that would cover “landscape architecture.” If such a law were passed using the definition of landscape architecture in the Act, virtually every gardener, landscape designer, contractor and even an entry-level yard maintenance worker would be covered. The definition of “Landscape Architectural Practice” under the Act includes: “developing design concepts; planning for the relationships of physical improvements and intended uses of the site; establishing form and aesthetic elements,” among other tasks routinely performed by non-landscape architects.92
ASLA tries to justify a practice act by claiming it will provide “both the public and professionals protection from unqualified individuals providing landscape architecture services under a different title.”93 However, the current titling Act is supposed to provide this same benefit, and it is difficult to see what a practice act would add other than to dramatically increase demand for licensed landscape architects while driving up the cost of routine landscape work for consumers and businesses alike.
This is the point that Dee Busch, a landscape entrepreneur and co-owner of Greenlawn Landscaping in Chicago, raises when asked about the impact a practice act would have in Illinois.94 After a first career as a graphic designer, Dee took a series of courses and obtained her voluntary certification in landscape design. She slowly began building her client base, and now her sole livelihood comes from her landscape design work. If a practice act were to go into effect, “we would be required to pay an outside source to sign off on our designs, and it would have an adverse impact on our ability to do business.” Dee recognizes the stakes that landscape architects have in the debate, but points out that in addition to increasing expenses, having such a “professional” on a team does not always raise quality. “From my viewpoint, all [requiring a landscape architecture license] would do is raise the cost to consumers of obtaining landscaping services. Moreover, lots of landscape architects don’t know the nuts and bolts of plant materials and how to design/build. There’s really no upside to the consumer.”
Illinois legislators should hold fast and reject any efforts by special interest landscape architecture groups to pass a landscape architecture practice act in Illinois. At stake are the ability of able, honest landscape professionals to truthfully advertise their services and the continued availability, at reasonable prices, of such services to consumers.
The state of Illinois has a lot of nerve questioning Burton Siegal’s right to call himself an engineer. The University of Illinois’s College of Engineering gave him a degree, for one thing, and a Distinguished Alumnus Award, for another. For 55 years, he has designed products, including part of a camera that traveled to the moon, and his clients have acquired patents on 125 or more of his designs. He is a successful and well-respected product engineer. He has been hired again and again by corporations as large as IBM and Ford because he has great problem-solving skills and the creativity and mechanical ingenuity to design things that work.
Nonetheless, Siegal has been cited by the Illinois Department of Financial and Professional Regulations for calling himself an engineer and calling his company Budd Engineering. He faces $5,000 fines on each count. The current version of the Professional Engineering Practice Act of 1989 says that someone who does not have a professional engineering license cannot use the term “engineer.”95 But the professional engineering license is not remotely related to the product design and cost-reduction consulting that Siegal does. Rather, it is required for work commonly referred to as “civil engineering.” According to the statute, examples of the kinds of work that require a professional engineering license include designing a power plant or a sewer system.96
Engineers like Siegal, who work for manufacturers, are not required to have the license. Indeed, less than a third of people with engineering degrees get licenses as professional engineers.97 The examination required for a professional engineer’s license relates exclusively to the knowledge important to civil engineering. “That exam has as much relevance to what I do as the color of my eyes,” says Siegal. And it would be absurd to require Siegal to acquire four years of work experience under the supervision of a licensed professional engineer so he could get the license.
What changed? Well, the story is like the story of hair braiders or landscape architects. Just as the Cosmetology Association lobbied to add braiding to the list of activities reserved for licensed cosmetologists, and ASLA has an agenda to stop unlicensed landscapers from working, the National Society of Professional Engineers and its state chapters are actively engaged in lobbying state legislatures and the DFPR to make sure they are the only ones who can use the term “engineer.” The general counsel for the National Society says, “If you hold yourself out as offering engineering services and you’re not a P.E., then you will run afoul of the law.”98 Siegal is offering engineering services and is doing so truthfully and legally. He should not be denied his First Amendment right to tell manufacturers truthfully what he does.
Entrepreneurs like Siegal are vital to Illinois. In fact, Illinois and the United States give tax incentives to customers who hire Budd Engineering for research and development because the firm is an important source of jobs for U.S. citizens. Siegal’s clients would hire him without the tax incentives, though, because they recognize he has the know-how and the talent to do the work better than anyone else. In a half-century as an engineer, Siegal was never sued by an unsatisfied client or anyone injured by any of the hundreds of products he has designed. “The first and only legal actions against me in 50 years claim I committed fraud by calling myself an engineer,” he said. “I am so sorry to hear that this can happen in America.”99
The state of Illinois can make sure that engineers overseeing public projects and infrastructure know how to keep the public safe, but it should not defer to a self-interested trade association that wants to expand its monopoly to extend over software, electronic and automotive engineers. Manufacturers should have the freedom to decide who can engineer a solution to their problems, and people like Siegal should be able to state proudly that they are engineers without having to get the government’s permission.
Josh Leith wanted to start his own moving business. He learned the ins and outs of the business the old-fashioned way, by working for an established company. As customers got to know him, they started to request him personally. He began to moonlight a bit, renting a truck and moving furniture for people he knew. In classic entrepreneurial fashion, he began to see that there was an opportunity for him to make it on his own, taking different kinds of jobs than those accepted by his employer. He has what it takes to make a moving company succeed: muscle and hustle.
Unfortunately, the Illinois Commerce Commission (the “ICC”) requires more than muscle and hustle for those who want to build a moving business. The application process belongs in Lewis Carroll’s Wonderland, where people can believe six impossible things before breakfast.
To move furniture or personal property from one house to another in Illinois, a new company must prove to the ICC that “a public need for the service exists; the applicant is fit, willing and able to provide the service in compliance with [the law and ICC rules]; and the public convenience and necessity requires” the ICC to grant permission.100 In other words, an aspiring mover has to prove, before he starts working with customers in Illinois to discover what they need and whether he can distinguish himself, that the public needs his new moving company. The applicant has to prove, before it can start building a business and making money, that he has the equipment and capital needed to serve the area in Illinois identified in his application. And, when all is said and done, he has to pay $1,350 to file the paperwork.
This law is gallingly anti-competitive. It runs directly contrary to the commonplace notion that competition is good for customers, and that entrepreneurs can prove themselves helpful to customers over time by charging lower rates or offering better service. In fact, the ICC is explicitly charged with protecting existing moving companies from the threat of competition. When deciding whether to permit a new company to operate in Illinois, the law requires the ICC to consider the effect that the applicant would have on existing companies’ services.101 Moreover, applicants have to publicize their applications, so that competitors can intervene in the process and convince the ICC’s judge that they are already serving the needs of customers in the territory identified in the application.102 Major moving companies regularly send an attorney to intervene in the application process.
In addition, the applicant has to present several witnesses who will testify under oath that they need the new company’s services for specific moves.103 The ICC is not allowed to consider whether the witnesses simply prefer to hire the new company, but only whether they need to.104 It is hard to imagine how people could swear to such testimony without perjuring themselves, particularly when the applicant has not yet been allowed to prove its unique ability to meet their needs.
On top of this evidence that the new mover is “necessary,” an applicant must prove that it is “fit” by attending a seminar, passing a test, submitting extensive financials, proving that it already has the money or equipment to run the business, writing safety, training and maintenance policies, buying insurance and demonstrating an acceptable traffic safety record.
Leith, discouraged by the extensive paperwork and the high filing fees, decided not to start his own business. Many others operate unauthorized until or unless they are caught. One ICC judge commended an applicant in a hearing for actually going through the process as prescribed by the law. Almost all applicants, she said, apply for a license only after they have been cited for unauthorized moving by the ICC. If the licensing process were straightforward and accessible, more movers would register with the state, and consumers might be better protected by enforced safety standards and other reasonable requirements. The current system, however, discourages companies from operating above ground and, perversely, puts the public at risk.
This system does not serve or protect the public. It serves and protects the existing moving companies. Under the Illinois Constitution, the legislature cannot give special privileges, as it has done here. Illinois needs to overhaul this law.
In troubled economic times, the jobs entrepreneurs create for themselves and others are absolutely essential. Yet, Chicago and Illinois continually put up senseless roadblocks for people who are trying to start businesses. Chicago must eliminate pointless regulatory requirements, reduce fees and streamline bureaucratic operations. The City Council must scrub the Municipal Code and remove all business regulations that are not necessary to protect the public. The rules need to be fair and equal for all Chicagoans in every neighborhood, and an entrepreneur’s alderman should never be allowed arbitrary power over the entrepreneur’s fate. The state of Illinois also needs to reform its system of regulating “professions.” Competitors should never have influence over who is licensed to work. And, fundamentally, no one’s professional calling should be constrained by laws that have nothing to do with public safety.
We recommend the following reforms to free entrepreneurs to take risks and make Chicago work:
- Review every fee and paperwork requirement in the Municipal Code to reduce the burden on entrepreneurs to the amount that is absolutely necessary to protect public safety.
- Clear aldermanic discretion out of the license and permit-application processes, so that favoritism and corruption cannot squeeze out promising entrepreneurs.
- Rewrite the laws on home-based businesses, so that Chicago allows all industrious people to work from home as long as they are doing no harm to their neighbors.
- Streamline requirements for food businesses and reduce fees. Permit food preparation in home kitchens as long as they pass a reasonable and objective inspection.
- Throw out the incomprehensible prohibitions on peddling in certain districts.
- Allow people to sell art and flowers and fruits freely. Permit traditional eloteros to serve customers prepared fruits and vegetables on the street.
- Reform the definition of “public place of amusement,” so small, neighborhood-friendly businesses, like child play centers, are not caught up in an obstacle course of regulatory requirements that sucks away time and money for no discernible reason.
- Do away with the license for retail computing centers altogether. Welcome entrepreneurs who encourage computer literacy and bridge the digital divide. Let them charge their customers in the way that makes sense for their businesses.
- Remove restrictions on parking for tradespeople who drive ordinary-sized vehicles and need to park near customers and near home.
We recommend the following reforms to Illinois law to open opportunities to talented people throughout the state without giving competitors a veto over new businesses:
- Limit qualifications for barbers, braiders and nail techs to those necessary for public safety. Drastically reduce the hours of schooling required (if any), and cancel continuing education requirements. Allow customers to decide who is qualified. Do not let a panel of insiders decide.
- Let people truthfully tell others what they do for a living. Reform all professional regulations that include a “titling act” like those covering landscape architects, interior designers, and engineers. The General Assembly should not enact anti-competitive laws at the behest of industry lobbyists.
- Overhaul the law authorizing household goods movers within Illinois, so no more is required than registration and proof of insurance. Cut the competitors out of the process and repeal requirements that a company prove it is “necessary” before it can open.
Chicago is the City of Broad Shoulders. People here are willing to work hard. They have big dreams. The city and state should never bully the dreamers into submission. Especially now, Chicago must free entrepreneurs to start businesses quickly and smoothly, to turn their imaginations and their dreams into wealth. Every entrepreneur, from every neighborhood, should say proudly that Chicago is my kind of town.
1 Banghart v. Walsh, 339 Ill. 132, 137-38 (1930).
2 Chicago Municipal Code 4-4-020, 4-5-010.
3 Henry B.R. Beale, “Home-Based Business and Government Regulation,” p. 1 (Feb. 2004).
4 Chicago Municipal Code 4-380-010(b).
5 Chicago Municipal Code 4-380-070(a).
6 Chicago Municipal Code 4-380-060(h).
7 Chicago Municipal Code 4-380-070(a).
8 Chicago Municipal Code 4-380-060(c)
9 Chicago Municipal Code 4-380-060
10 The Chicago home-based business license is not available to food-based businesses, including catering. See Chicago Municipal Code 4-380-070.
11 Chicago Municipal Code 4-8-010 et seq.
12 Chicago Municipal Code 7-38-001 et seq. (Food Establishments—Sanitary Operating Requirements), 7-40-005 et seq. (Food Establishments—Care of Foods), and 7-42-010 et seq. (Food Establishments—Inspections, Violations and Hearing Procedures).
13 410 ILCS 650/2 et seq.
14 77 Ill. Admin. Code Sections 750.5 (Food Service Sanitation Code) and 760.5 et seq. (Retail Food Sanitation Code).
15 Authors’ interview with Katrina Markoff of Vosges on September 11, 2008.
16 Wendell Hutson, “Street vendors part of down-low economy,” Chicago Defender, Oct. 8, 2008.
17 Chicago Municipal Code 4-244-030.
18 Chicago Municipal Code 4-5-010(66).
19 Chicago Municipal Code 4-244-140.
20 Deanna Isaacs, “Got a Permit for That?,” Chicago Reader (July 24, 2008).
21 Weinberg v. City of Chicago, 310 F.3d 1029 (7th Cir. 2002).
22 Monica Eng, “Say yes to fresh fruit, no to ticketing vendors,” Chicago Tribune, Aug. 21, 2008.
23 Leonor Vivanco, “The other fast food: Legal or not, treats vendors peddle are hot (or cold) stuff,” Chicago Tribune, Aug. 12, 2008.
24 Chicago Municipal Code 4-244-150.
25 The DBA has made strides in providing customer service and has tried to streamline the process of licensing to some degree. It is a sign of the extreme complexity of the laws they must administer that they need consultants to guide citizens through the process.
26 Chicago Municipal Code 4-156-310(a).
27 Chicago Municipal Code 4-156-310(b).
28 Chicago Municipal Code 4-156-310(c).
29 Chicago Municipal Code 4-156-310.
30 Chicago Municipal Code 4-156-300: “[a]ll of the following persons shall be in violation of this subsection (1) the owner of the property, (2) the lessee of the property, (3) the manager of the property, (4) the producer of the amusement, (5) the presenter of the amusement, and (6) the person conducting the amusement.” Each of these persons is subject to fines.
31 City of Chicago Application for Business License and Tax Registration; Public Place of Amusement License Code 1050.
32 Chicago Municipal Code 4-72-010 (“‘Day care center’ or ‘child care center’ means any institution or place in which are received three or more children, not of common parentage, apart from their parent or guardian, between the ages of six weeks and six years for care during part or all of a day. The term is further construed to include similar units operating under any other name whatsoever with or without stated educational purpose,” (emphasis added)). Day care centers are themselves subject to a great deal of regulation governing every detail of their space and personnel.
33 Chicago Municipal Code 4-156-305(c). Rodriguez would qualify for an exception to the PPA code because of the small size of the establishment (occupancy fewer than 100 persons) but for the fact that it offers “music, dancing, or other amusement” and has an “admission fee, minimum purchase requirement, membership fee or other fee or charge [that is] imposed for the privilege of entering the premises.”
34 Chicago Municipal Code 4-156-010.
35 E.g., Chicago Municipal Code 4-156-430 (“Athletic contests at night and on weekday afternoons; restrictions”).
36 Chicago Municipal Code 4-156-020 (“an amusement tax is imposed upon the patrons of every amusement within the city. The rate of the tax shall be equal to eight percent of the admission fees or other charges paid for the privilege to enter, to witness, to view or to participate in such amusement . . . ”).
37 Online license search feature at: http://chicago.everyblock.com/business-licenses/by-license/
38 Authors’ interview with Esmeralda Rodriguez, December 12, 2009.
39 Fran Spielman, “Downtown indoor play center leaps ahead with panel’s OK of Day Frog,” Chicago Sun-Times, February 1, 2008.
40 Chicago Municipal Code 4-156-330(a).
41 Chicago Municipal Code Section 4-156-330(a)(4). A children’s development center is defined as “any entity with occupancy of less than 200 people that provides, exclusively to children, 12 years or younger accompanied by a parent or legal guardian, recreational, cognitive, or educational activities.” Miller commented after obtaining the exemption that allowed Day Frog to open, “a full-scale legislative change is difficult because of the tax revenue at stake.” (Authors’ interview with Rick Miller, February 9, 2009). Miller explained that he focused on obtaining an exception to the location restrictions for child play centers because city government does not want to diminish the amusement tax revenue it can obtain from such businesses. This of course does not take into account the many establishments that are offering similar amusements to children and caregivers without licenses because of the high costs of obtaining the PPA. Based on his knowledge of the child play center community, Miller estimated that a minority of play centers attempted to get a PPA license as required.
42 Chicago Municipal Code Sections 17-3-207 (use table) and 17-3-0207-M (parking table). It appears that the default use classification for a business that needs a PPA license appears to be “participant sports and recreation—indoor” regardless of whether this use describes the business’s activities.
43 Authors’ interview with Lorena Franch, February 23, 2009.
44 Chicago Municipal Code Section 4-156-311.
45 Chicago Municipal Code Section 4-156-311(a).
46 Chicago Municipal Code Section 4-156-311(b).
47 Chicago Municipal Code Section 4-156-311(d)(1).
48 Chicago Municipal Code Section 4-156-311(d)(2).
51 Chicago Municipal Code Section 4-156-320.
53 Information based on authors’ telephone interview with David Lane, December 30, 2008.
54 Chicago Municipal Code Section 4-253-010.
55 Chicago Municipal Code Section 4-253-030.
57 Chicago Municipal Code Section 4-253-040(d). It is probable that these rules were created to save retail computer centers from the burdens of the PPA application process, and the City Council was trying to make sure that arcades would still be PPA’s. Yet, the new requirements they created are hardly a favor for people trying to set up a business providing computer access to Chicagoans.
58 Chicago Municipal Code Section 4-253-040(e).
60 Chicago Municipal Code Section 4-253-040(b).
61 Chicago Municipal Code Section 4-253-050.
62 Chicago Municipal Code Section 9-64-170(a).
63 Chicago Municipal Code Section 4-216-010.
64 Chicago Municipal Code Section 9-100-020(b).
65 Chicago Municipal Code Section 9-64-170(d).
66 Authors’ telephone interview with Tim Tindle on December 18, 2008.
67 Chicago Municipal Code 9-64-170(a).
68 Authors’ telephone interview with Matt Tindle, August 5, 2008.
69 Morris Kleiner, Licensing Occupations: Ensuring quality or restricting competition, at 1 (Kalamazoo, MI: Upjohn Institute, 2006)
70 Demonstrating this point, it is the law of Illinois that the Barber, Cosmetology, Esthetics, and Nail Technology Board, which advises the Department of Financial and Professional Regulation (DFPR) on all matters related to the practice of these trades, consist of 6 licensed cosmetologists (including at least 2 representing schools, 2 representing salons with multiple locations, and one who owns an independent salon), 2 licensed barbers, one licensed esthetician or esthetics teacher, one licensed nail technician or nail technology teacher, and one public member who holds no licenses issued by the DFPR. 225 ILCS 410/4-2.
71 225 ILCS 410/2-1 to 2-2. Cain’s Barber College on the South Side of Chicago publicizes on the internet that its tuition is $6,550, and fees and expenses are an additional $900.
72 225 ILCS 410/1-7.5.
73 Citrano v. Dept. of Regis. & Educ. Of Ill., 414 N.E.2d 74 (App. Ct. Ill. 1st 1980).
74 Cosmetology is defined as including most of the hair treatment of barbering (plus braiding), as well as nail decoration or treatment, scalp massage, cosmetics application, applying false eyelashes and tweezing unwanted hair. 225 ILCS 410/3-1.
75 Tasneem Paghdiwala, “The Politics of Braids,” Chicago Reader, Sept. 1, 2006.
76 225 ILCS 410/3-2(1). It is strikingly odd that barber licenses require the same number of hours of schooling for a subset of the skills of a cosmetologist. The inequity may descend from an era when beauticians required fewer skills than barbers because women did not get their hair cut.
77 Tasneem Paghdiwala, “The Politics of Braids,” Chicago Reader, Sept. 1, 2006.
78 Banghart v. Walsh, 339 Ill. 132, (Ill. 1930) (holding that prohibiting beauticians from cutting women’s hair unless they went to barber school and apprenticed to a barber, where they would have to spend pointless hours learning to shave men and to trim beards, was an unconstitutional deprivation of liberty).
79 Scully v. Hallihan, 365 Ill. 185, 192 (Ill. 1936).
80 225 ILCS 410/3-7.
81 225 ILCS 410/4-23.
82 68 Ill. Admin Code 1175.1200(c)(4).
83 225 ILCS 410/3C-2; 225 ILCS 410/3C-8.
84 Nails 2007-2008 The Big Book, p. 34.
85 225 ILCS 315/4.
86 225 ILCS 315/11(a).
87 225 ILCS 315/4.5
88 Authors’ telephone interview with Annette Held on December 16, 2008.
89 Edenfield v. Fane, 507 U.S. 761, 770-71 (1993) (“a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree”); David Harrington and Jaret Treber, “Designed to Exclude: How Interior Design Insiders Use Government Power to Exclude Minorities & Burden Consumers,” (Institute for Justice, February 2009), at 6 (demonstrating increased consumer costs in regulated states).
90 http://www.idfpr.com/dpr/news/page2008.asp and linked pages for access to disciplinary reports for the years 1999 to the present. The authors reviewed all disciplinary reports for 2006, 2007 and 2008, and found no citations for violations of the Act.
91 Harrington and Treber, supra note 90, at 3.
92 225 ILCS 315/3(f).
93 “Landscape Architecture in Illinois: The Case for Licensure,” White Paper of the Illinois Chapter of the American Society of Landscape Architects, p. 3.
94 Authors’ telephone interview with Dee Busch on January 7, 2009.
95 225 ILCS 325/4(o).
96 225 ILCS 325/4(o).
97 Charles J. Murray, “Are You An Engineer If You Don’t Pass the P.E.?” in Design News, Sept. 8, 2008.
99 Authors’ telephone interview with Siegal, February 27, 2009.
100 625 ILCS 5/18c-4202(2).
101 625 ILCS 5/18c-4204(b).
102 625 ILCS 5/18c-2106(1), (2)(a)(i). Specifying the territory of Illinois that an applicant intends to serve is strategically fraught. The applicant has to show that the new service is needed in that area and has to show that it already has the finances, equipment, and capability to serve that area. 92 Ill. Admin. Code 1457.80(a). Again, this is impractical (to say the least) when an entrepreneur has not yet been allowed to build up a customer base and bank account.
105 625 ILCS 5/18c-4204(1)(a).
104 625 ILCS 5/18c-4204(3)(a).
About the Authors
Elizabeth Milnikel—Director, Institute for
Justice Clinic on Entrepreneurship
Elizabeth Milnikel is the Director of the Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School. Under Beth’s guidance, Chicago law students take their first steps into the practice of law by providing legal advice to lower income entrepreneurs. Beth and her students have helped the owner of a local shoe store re-negotiate her lease, advised an experienced moving man on the convoluted process required to start his own authorized moving company, and drafted agreements to protect the characters created by a toy company. Beth also teaches a seminar on entrepreneurship at the University of Chicago Law School, to introduce law students to the vital role played by entrepreneurs and the legal obstacles they must overcome. Under her leadership, the Clinic has extended its reach to many entrepreneurs and community leaders, so that many more people may learn why the law must be made a help, rather than a hindrance, for inner city entrepreneurs.
Beth came to the IJ Clinic from the law firm Sidley Austin Brown & Wood, where she practiced for several years with a specialty in intellectual property litigation. Prior to joining Sidley, she clerked for the Honorable Bruce M. Selya on the Court of Appeals for the First Circuit. Beth received her J.D. magna cum laude from University of Michigan Law School in 1999. During her time at Michigan, she served as Managing Editor of the Michigan Law Review and interned in the General Counsel’s office of the Guggenheim Museum. As an undergraduate, Beth studied Comparative Literature at Yale University, graduating magna cum laude in 1996.
Emily Satterthwaite—Assistant Director,
Institute for Justice Clinic on Entrepreneurship
Emily Satterthwaite is the assistant director of the Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School. Among other assistance, Emily and her students have created corporate bylaws that are customized to clients’ specific business needs and goals, represented the owner of an e-business in his negotiations with strategic partners, and fought on behalf of the owner of a cleaning and decorating service to hold his customer accountable under the agreement governing their relationship. Along with Director Beth Milnikel, Emily also instructs a seminar on entrepreneurship at the University of Chicago Law School to introduce law students to the vital role played by entrepreneurs and the legal obstacles they must overcome.
Emily received her B.A. in Economics with Distinction from Yale College in 1997, where she served as Editor-in-Chief of the Yale Political Monthly (now the Yale Political Quarterly). After studying for one year in the Ph.D. program in Economics at the University of California at Berkeley, Emily attended Stanford Law School and was a founder of the Social Entrepreneurship Club. Following her graduation, Emily was awarded a Dorot Fellowship and lived in Jerusalem for one year. Emily comes to the IJ Clinic from Skadden, Arps, Slate, Meagher & Flom LLP in New York City and Chicago, where her practice focused on the federal income taxation of certain business entities.