NCPA - National Center for Policy Analysis

Arizona's Barriers to Entrepreneurship Create Cartels

January 27, 2004

Arizona's regulations and licensing requirements make it difficult to start a small business, according to the Goldwater Institute. Although Arizona ranks 20th of the 50 states in cost and ease of conducting small business (based on a survey by the Small Business Survival Committee), state and local ordinances continue to place undue burdens on business activities:

  • Entrepreneurs in Phoenix wishing to remodel must pay fees ranging from $1,800 to $6,000 and wait several weeks for city approvals.
  • Special permits are required for a host of occupations, including auctioneers, street vendors, and curb painters, with application fees ranging from $85 to $940.
  • Food preparation businesses must go through a three-month review process which costs anywhere from $53 to $382.
  • The state's Board of Cosmetology requires people who simply braid hair to complete 1,600 hours of cosmetology classes at the cost of about $10,000, a cost that is out of range for many would-be hair braiders.
  • The Tucson Airport Authority limits the number of airport taxis to 32 cabs, many other cab drivers potential profit; Phoenix requires airport cabs to be of model 2000 or newer.
  • Home child care businesses that care for five or more children are subject to a barrage of house requirements -- a minimum play space of 80 square feet per child, room temperatures between 68 and 82 degrees Fahrenheit, and an outdoor play area with at least a four-foot high fence.

While entrepreneurs agree that some standards are needed to promote consumer health and safety, many argue that requirements go above and beyond that goal. As Timothy Keller notes in his report, "Too often, regulators choose to use a sledgehammer when the precision of a scalpel is more appropriate."

Source: Timothy D. Keller, "Burdensome Barriers: How Excessive Regulations Impede Entrepreneurship in Arizona," Policy Report No. 185, December 8, 2003, Goldwater Institute.


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