NCPA - National Center for Policy Analysis

Licensing Restrictions Shut Down Little Girl's Lemonade Stand

August 11, 2010

On July 29, 7-year-old Julie Murphy committed the "crime" of selling lemonade for 50 cents a cup at an arts fair in Portland.  Since the young entrepreneur did not have a temporary restaurant license costing $120, the county health inspectors threatened to fine her $500 if she did not leave.  Even after offering the lemonade for free and for donation only, the county officials shut down her lemonade stand.  

This is just one of countless examples of how needless fees and regulations have stifled entrepreneurship.  Due to media attention and public outrage, the county health department has since backed away from the lemonade stand issue.  However, stories similar to the government shutting down Julie Murphy's lemonade stand are far too common, says FreedomWorks. 

Here are just a few ridiculous licensing requirements that entrepreneurs face around the country: 

  • In Florida, it is illegal to work as an interior designer without proper government licensing; even if the designer has a college degree in the field, performing interior design services without a license is punishable by up to a year in jail or $1,000 in fines.
  • In Texas, it is prohibited to thread eyebrows -- an alternative to eyebrow waxing -- without obtaining an irrelevant state license; in order to legally perform this ancient Indian art, eyebrow threaders are now required to spend 1,500 hours and $20,000 in a government-approved cosmetology school that does not even teach the skill.
  • Furthermore, in Texas, every computer repair technician must obtain a degree in criminal justice or have a three-year apprenticeship under a licensed private investigator to legally fix computers; computer repair technicians face $4,000 in fines, a $10,000 civil penalty and up to one year in jail if they do not have an extraneous criminal justice degree. 

Simply, compulsory licensing is used to restrict competition in a marketplace.  Well-funded industry cartels lobby for strict licensing requirements that make it difficult for newcomers to sell their competing product or service.  These harsh licensing laws are harmful to both entrepreneurs and consumers.  Would-be entrepreneurs who cannot afford the high cost of licensing will not have the opportunity to operate their business.  As a result, there will be fewer employment opportunities and consumers will be forced to pay higher prices for goods and services with less variety, says FreedomWorks.  

Source: Julie Borowski, "Licensing Restrictions Shut Down Little Girl's Lemonade Stand," FreedomWorks, August 10, 2010. 

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