Lots of Business Red Tape in the Red State of S.C., Study Finds

February 13, 2013

Investigative Reports

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Red TapeBills in the S.C. General Assembly would push the state Department of Labor, Licensing and Regulation into the business of setting rules for music therapists and interior designers, among other occupations.

“Interior design is so subjective. Licensing them is an absurdity,” said Walter Carr, a Charleston-area businessman of 42 years who serves on the Small Business Regulatory Review Committee at the (S.C.) Commerce Department, when contacted Tuesday by The Nerve.

Sen. Thomas McElveen, D-Sumter, is the sponsor of one of the interior-design regulation bills, S. 339, while Rep. Jenny Horne, R-Dorchester, has proposed similar legislation (H. 3417).

Meanwhile, Sen. Hugh Leatherman, R-Florence and the Senate Finance Committee chairman, is the sponsor of the music-therapy bill, S. 277. An advocacy group for music therapists has circulated buttons among lawmakers at the State House that reads “Music Therapy Matters” in letters over a picture of the U.S. Capitol.

Those bills are among legislation in committees that would create new or additional requirements, or higher fees, for South Carolinians to do specific occupations. Other jobs that would see new or additional requirements include, with bill numbers in parentheses:

  • Accountants (H. 3459);
  • Bail bondsmen (H. 3138);
  • Funeral directors (H. 3139);
  • Hair braiders (H. 3148 and H. 3411); and
  • Real estate brokers and agents (S. 75 and S. 76).

The rules for those occupations would pile on top of regulations for several construction trades, barbers, cosmetologists, truck drivers, security guards and milk samplers, just to name a few.

The proposed new rules come in light of a May 2012 study by the Institute for Justice, an Arlington, Va.-based libertarian public-interest law firm, which recommended that South Carolina lawmakers should direct their attention to reforming occupational regulations and licensing.

The group’s occupational licensing snapshot of 102 moderate-income occupations regulated by at least one of the 50 states or the District of Columbia shows the Palmetto State is not so business friendly. According to the Institute for Justice study, South Carolina has:

  • Half of (51 out of 102) moderate-income occupations licensed;
  • The 14th-most burdensome licensing laws in the country; and is
  • The 10th-most “extensively and onerously” licensed state.

“The main reason for South Carolina’s poor ranking is its high barriers to enter the construction trades.The state licenses 22 construction occupations, including both general and residential contractor licenses,” the report states.

“Aspiring general contractors in 14 of the construction trades lose two years to experience, take one to two exams and pay fees between $250 and $325,” according to the study. “A majority of these occupations are only licensed in around 30 states, 19 of which have no training requirement. Similarly, to obtain one of the eight residential contractor licenses, workers lose one year to experience and pay a $50 fee. These occupations are generally licensed by just 10 states, and South Carolina is one of only three to require any substantial amount of training.”

For example, South Carolina is one of only five states requiring a license for heating, ventilation and air conditioning contractors, according to the study. The Palmetto State is one of nine states that license floor sander and drywall contractors, and it is one of 10 states that require a license for contractors who paint, install insulation, and work as a carpenter or cabinet maker.

Excessive business regulations have the attention of Gov. Nikki Haley. She issued an executive order Tuesday creating the Governor’s Regulatory Review Task Force, which will produce a final report by Nov. 15. State agencies will review their statutes, rules and regulations, with a May 15 deadline to have their reports to the task force.

The 11-member task force will work with the Small Business Regulatory Review Committee (SBRRC) to identify “current and proposed statutes, regulations, and policies that are a burden on South Carolina’s economy,” according to the executive order.

Haley in her order also said she wants the task force to determine “whether their costs to businesses and employers outweigh their intended benefits.”

The task force will focus on businesses of all sizes, the executive order states. Dan Dennis, a Columbia-area business owner and the SBRRC chairman, will serve on the governor’s task force. He did not return several phone calls from The Nerve seeking comment on business regulations.

“From a small business perspective, the biggest issue in South Carolina is being over-regulated,” said Ben Homeyer, director of the South Carolina chapter of the National Federation of Independent Business.

“We are always interested in making business less burdensome and cumbersome,” Homeyer said, adding, “I think the Legislature and the governors are moving in the right direction in removing regulations.”

Carr said the SBRRC, which was created in 2004 and is made up of volunteer business owners with a mission to review business regulations, had a victory a few years ago related to workers’ compensation. He also said in the past year the board successfully defeated rules for in-home health care professionals.

Aside from burdensome rules on businesses, the group also is concerned about state tax policy.

Carr said big businesses can receive incentives to come to South Carolina, but that doesn’t happen for small businesses. He contends if the state got its tax policy in order and reduced regulations on business, the incentives would disappear.

“They wouldn’t be needed,” he said.

Carr said lawmakers and agency leaders should follow one rule: Keep it simple.

“These licensing laws force people to spend a lot of time and effort earning a license instead of earning a living,” said Dick Carpenter, director of strategic research at the Institute for Justice and the report’s co-author, in a prepared statement when the group released the study. “They make it harder for people to find jobs and to build new businesses that create jobs.”

The Institute for Justice study shows South Carolina regulating many of the 102 occupations at a pace that exceeds North Carolina and Georgia. The Palmetto State ranks similarly to Virginia and Tennessee in two of those three categories, according to the study.

Data reveals those practicing the 102 occupations studied are not only more likely to be low-income, but also to be minority and to have less education, which makes licensing hurdles even harder to overcome. Also, about half the 102 occupations offer the possibility of entrepreneurship, suggesting licensing laws affect both job attainment and creation, the Institute for Justice report found.

The study calls on state lawmakers and agency leaders to ask three questions about occupational licensing:

  • Is an occupation unlicensed in other states?
  • Are the licensure burdens for an occupation high compared to other states?
  • Are the licensure burdens for an occupation high compared to other occupations with greater safety risks?

Several licensing bills have been before the Other Occupational Regulation and Licensing Boards Subcommittee of the House Medical, Military, Public and Municipal Affairs Committee. Rep. Kit Spires, R-Lexington and the subcommittee chairman, was not available for comment; the House is on furlough this week.

The Department of Labor, Licensing and Regulation, which regulates occupations, had no response from spokeswoman Lesia Kudelka when The Nerve asked the agency for a reply to the Institute for Justice study.

Carpenter in the report concluded: “Finding a job or creating new jobs should not require a permission slip from the government. As millions of Americans struggle to find productive work, one of the quickest ways legislators can help is to simply get out of the way: reduce or remove needless licensure burdens.”

The Institute for Justice recommends that if a rule does not benefit the health or safety of someone, it probably isn’t needed.

Olson can be reached at (803) 254-4411 or curt@thenerve.org. Follow him on Twitter @thenerve_curt and @olson_curt. Follow The Nerve on Facebook and on Twitter @thenervesc.