Report Examines Obstacles to Urban Entrepreneurship

By O'Toole, David | Nation's Cities Weekly, March 12, 2001 | Go to article overview

Report Examines Obstacles to Urban Entrepreneurship


O'Toole, David, Nation's Cities Weekly


A recently released report from the Reason Public Policy Institute entitled, "Giving a Leg Up to Bootstrap Entrepreneurship: Expanding Economic Opportunity in America's Urban Centers" (January 2001) put forth several proposals on how cities can develop better business strategies for their low-income residents. The study focused on the constraints imposed by entry-level business regulation from municipalities and states and suggested ways to rethink regulation and enhance entrepreneurship in low-income urban neighborhoods.

The report examines Atlanta, Los Angeles, Dallas and Boston to determine how current regulatory practices have limited low-income area business entrepreneurship in these cities. Examples of businesses studied were taxi services, street vending, and home-based catering, childcare centers and hair salons.

The report identified five major regulatory hindrances to neighborhood revitalization through low-income business ownership.

Current regulations tend to overlook performance or safety measures and opt instead for quantitative measures such as hours of training or dollars of fines collected for violations. The current regulatory structure provided little incentive for a business to try to perform better.

Regulations are often designed simply to ensure compliance with rules rather than quality. For example, research on hair braiding regulations found that the education requirements were unrelated to the quality of the service.

Regulatory structures are often complicated, making it hard for new, less regulatory-savvy businesses to navigate the local laws. This was particularly evident in Boston taxicab regulations, where the rules included a cap on the number of taxis citywide, off-street parking prohibitions, minimum fleet size for start-ups, citywide service requirements and variable licensing fees.

The complexity of regulations is a serious deterrent to business ownership, a fact that leads to the spread of unlicensed facilities. …

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