Committee examines regulatory hurdles facing entrepreneurs

The House Small Business Committee explored barriers during a hearing on Wednesday that federal licensing regulations place on entrepreneurs and steps the FTC could take to improve the system.

House Small Business Committee Chairman Rep. Sam Graves (R-Mo.) said five percent of occupations required licenses 60 years ago, but the number has since ballooned to 30 percent, according to a press release.

“In many cases, these rules impose a significant regulatory burden on small businesses and entrepreneurs,” Graves said. “Licensing regulations create barriers to work that disproportionately affect lower and middle class Americans. As state licensing boards are typically comprised of people from that profession, their decisions about who can enter their profession can reduce competition. It is important that these regulations are narrowly tailored to provide a public benefit without unfairly limiting opportunities.”

Previously, the House Small Business Subcommittee on Contracting and Workforce convened a hearing in which entrepreneurs testified about how licensing requirements impact startups. Wednesday’s hearing went a step further by exploring ways the FTC could use antitrust laws to combat anti-competitive licensing requirements.

FTC Office of Policy Planning Director Andrew Gavil said licenses sometimes protect consumers from health and safety risks or support other valuable public policy goals.

“However, that does not mean that all licensure is warranted and, most importantly in our experience, it does not mean that the benefits of all of the specific restrictions imposed on occupations are sufficient to justify the harm they can do to competition and mobility in the workforce,” Gavil said. “We have seen many examples of licensure restrictions that likely impede competition and hamper entry into professional and services markets, yet offer few, if any, significant consumer benefits. In these situations, regulations may lead to higher prices, lower quality services and products, and less convenience for consumers.”

Graves said the hearing on Wednesday provided insight into the agency’s role in protecting the free market that would help the committee eliminate barriers to entrepreneurship.