Business-Friendly Dallas Often Discourages Entrepreneurs

New Study Shows Regulations Increase Costs and Thwart Economic Growth, Financial Independence

DALLAS (February 8, 2001) -- The pro-business attitude of state and local governments in Texas has contributed to an economic boom in the D/FW Metroplex. Yet according to a new study by the Reason Public Policy Institute in association with the Dallas-based National Center for Policy Analysis (NCPA), regulatory barriers thwart new small business development, especially affecting those low-income areas that most need help-minorities, new immigrants and single parents.

"Dallas residents who want to start their own business must become experts in legal minutia that often have little or nothing to do with their ability to provide a successful service or product," said H. Sterling Burnett, NCPA senior policy analyst and the study's co-author. "Often, a business could easily provide a high quality product or service to a satisfied customer but be stymied by the maze of local regulations."

In the report, Burnett and his co-authors examine how many regulations do little to protect the health and safety of the public, yet push economic independence out of reach for those most in need of help. In addition to Dallas, the study examined regulatory environments in Atlanta, Boston and Los Angeles. While Dallas was the most business-friendly of the cities studied, the report did find that some of its regulations were particularly hard on minorities, recent immigrants, and stay-at-home single parents. For example:

  • Dallas places strict licensing requirements on African-American style hair braiding, often requiring costly formal training in areas unrelated to their profession. For example, the Texas Cosmetology Commission relentlessly pursued Dallas hair braider Dana Brantley in 1995 and 1997, for operating without a cosmetology license. For this offense, she received a criminal conviction.
  • Dallas regulations prevent many residents from starting a home-based business, which in many instances would allow a single parent with young children for example to financially support and look after his or her family at the same time. These regulatory restrictions include preventing home-based businesses from selling any products on the premises and advertising either on or off the premises via a sign, display, or in a telephone directory.
  • Dallas's regulations of taxicabs make it nearly impossible for an entrepreneur to start a car service, especially a low-income resident or a recent immigrant. For example, new taxicab companies must have a minimum of 25 taxicabs, adding a minimum of $6,000 in licensing fees and eliminating the opportunity to enter the market with one car or on a part-time basis. Dallas also requires that a company's cabs be no older than five years old, and that they be inspected three times a year. After accounting for insurance for all 25 cabs plus other regulatory requirements, the regulatory cost of starting up a taxicab company in Dallas is more than $245,000.

"Small businesses are the engine for economic growth throughout the country and in this region," said Burnett. "While the city routinely provides incentives for big business, it sets up unnecessary roadblocks for potential entrepreneurs. Dallas should work to give entrepreneurs a leg up instead of stopping them at the starting line."