From: http://www.bizjournals.com/

Entrenched industries don’t want to lose business to upstarts, which is why the taxi industry is fighting Uber’s ride-sharing service and why automobile dealers oppose Tesla’s direct sales model.

But while these high-profile battles get the headlines, many more entrepreneurs are being stifled by a more mundane burden: the explosion of occupational licensing requirements across America. Nearly 30 percent of all occupations are licensed at the state level today, compared with only 5 percent in 1950, according to the House Small Business Committee.

These licensing requirements add to the cost of starting a business and tend to limit competition in many industries by imposing barriers to entry.

That’s why Rep. Sam Graves, who chairs the committee, has asked the Small Business Administration’s Office of Advocacy to study the impact of occupational licensing on entrepreneurs and would-be entrepreneurs.

“We are concerned that occupational licensing laws which are not narrowly tailored to the public benefit could have the unintended consequence of stifling entrepreneurship,” Graves wrote in a letter to the Office of Advocacy. “Occupational licensing also may impede innovation and business development as would-be entrepreneurs focus their resources on meeting licensing board requirements rather than on meeting the needs of their businesses or customers.”

Graves’ committee has held two hearings on this issue. At the first hearing, the committee heard from an interior designer who has fought occupational licensing legislation for her industry in New Hampshire and South Carolina.

“Licensing this industry is nothing more than restraint of trade,” said Patti Morrow, president of Juxtapose Interior Design in Greer, S.C.

It also heard from Melony Armstrong, an African hairbraider in Tupelo, Mo., who successfully sued that state’s licensing requirements, which would have forced her to take 3,200 hours of classes and obtain a cosmetology license and cosmetology instructor’s license in order to teach others how to braid hair, her ultimate goal.

“The group that benefited most from Mississippi’s regulatory regime was the cosmetology establishment. Practicing cosmetologists made up the State Board of Cosmetology and could set the bar for entry to their occupation high (and thereby keep competition to a minimum), and cosmetology schools enjoyed captive customers,” Armstrong testified.

“I was not about to submit to such naked economic protectionism.”

Last month, a Federal Trade Commission official told the committee that while licensing requirements can protect consumers from health and safety hazards, in many cases they mainly serve to impede competition.

“In these situations, regulations may lead to higher prices, lower-quality services and products, and less convenience for consumers,” said Andrew Gavil, director of the FTC’s office of Policy Planning. “In the long term, they can cause lasting damage to competition and the competitive process by rendering markets less responsive to consumer demand and by dampening incentives for innovation in products, services and business models.”

The FTC has written hundreds of comment letters to state officials and self-regulatory entities about coccupational licensing requirements. The agency occasionally has authorized lawsuits challenging anticompetitive behavior by occupational regulators. In 2010, for example, it challenged the North Carolina Board of Dental Examiners for issuing cease-and-desist letters to non-dentist providers of teeth-whitening services. That case is now pending before the U.S. Supreme Court.

At issue is whether an occupational licensing board composed of private-sector representatives but created by the state is subject to antitrust scrutiny.

“It is likely that the Supreme Court’s ruling will have significant implications for occupational licensing boards moving forward,” Graves wrote.