HOW GOVERNMENT HURTS SMALL BUSINESS (and Tyranny by Zoning!); also Residential Zoning
An African-American woman is told by the State of California that she must have a cosmetology license (probably costing over $5000 and months of time) to run a simple business braiding hair with an invention.
A housewife in
Generally, people who work at home on computers have been left alone by the zoning craze, as their businesses are generally constrained reasonably, by rules regarding outdoor advertising, parking, visitors, storage of hazardous materials, and the like. These rules seem sensible to protect neighborhood life and property values and security. But many zoning laws were evolved early in the 20th Century when most businesses were related to factories and manufacturing, with the generation of noise and pollution. Zoning laws don’t always, in come communities, keep up with the opportunities offered by technology. What is going on here?
The City of
These laws sound like they would be impossible
to enforce, but a rabbi in one town was actually fined for owning and using a
typewriter (let alone a computer) in his home for commercial or work-related
When one considers that
telecommuting and working from home saves energy, reduces pollution and helps
families, it seems like nonsense to try to prohibit it (maybe employers should
be required to offer it!) Of course, zoning laws could make a distinction
between work done from a “real” employer (such as computer support when on
24-hour nightcall) and work done by a home-based
proprietorship. Why? One obvious motive could come from overbuilding and the
pressure to rent more commercial real estate in many cities. Home-based
businesses (with very low overheads) do not “pay their dues.” This sounds very
cynical, but the LA law may be motivated by turf protection of established
writers. Technology can affect old fashioned writing and scriptreading
At this point, it’s useful to provide a functional decomposition of just what zoning means with respect to “work at home.” In many cases, a person will get a business license from his or her locality, and may very well pay some local taxes based on income from the business, or may have to pay tax on physical property (computers, vehicles, equipment) used in the business. The taxes may be very low for small businesses, or may not kick in until a certain income stream is reached. The license will normally be associated with an assumed name (or assumed business name) legally registered with the local and/or state government. The assume name is recognized by financial institutions, vendors, creditors, and other stakeholders. Registering a business license and an assumed name must take place, for example, if one wants to self-publish or self-distribute a book that one has authored, or even a small independent film that one has made. (The ISBN system for books is keyed to these names.) Registering an assumed name (even if that name is used only as a domain name on the World Wide Web and is properly registered with an ICANN-recognized registrant) will help protect the business owner from possible trademark infringement claims (although the name might have to be registered separately in every state if the product is shipped to every state (even electronically by the Internet), usually not a practical option for a small business.) The business, wherever it is operated, normally must comply with zoning laws, and if it is operated from the home or apartment as a home based business, the business owner usually needs a home occupation permit (and often a sales tax permit from the state). However, the converse is not true. A home occupation does not necessary imply the existence of a business entity (proprietorship, partnership, or corporation). A free-lance writer who submits articles for publication to third parties and gets paid at least once for such a submission and who created and submitted the work from home technically has a home occupation. (So would the writer who at any time in the past got his or her own ISBN under a business name or even his or her own name—which is allowed—to publish a book.) A locality like LA, Chicago or some New Jersey communities known to have pursued writers in the past, would likely follow a “don’t ask don’t tell” rule on home occupations that don’t have separate business names—they would be likely to act or even find out only if another party complained (and such a party could be a competitor, a person who lost a “real” job to the freelancer, a heckler who did not like the person or what the person says or exposed, or even in some cases a family member who feels insulted). Therefore, zoning laws could be invoked for reasons that have little to do with the actual residential values of the property where the person works. Of course, a home occupation that actually does affect the neighborhood (with traffic, hazardous materials, appearance, and the like) would easily attract attention of zoning regulators even without the need for a business license.
Zoning, then, may seem like a device to protect insular life-styles or gated communities, or perhaps as a kind of economic turf protection, especially for commercial real estate interests or sometimes for unions. It could also raise murky philosophical questions about non-transaction-oriented “businesses” that people set up as vehicles for future self-promotion. Some would argue that these invite spam, piracy, and other ills’ but if so, they have nothing to do with residential livability or property values; they may affect some people’s ideas about morality and fair competition.
There is one other new wrinkle to
small “shell” businesses and assumed names: they could be set up as a vehicle
for identity theft (as well as spam, virus-writing, and piracy). Robert O’Harrow Jr. provides The Washington Post,
Another related zoning issue for
small dance clubs, especially, is violence taking place near or at the clubs,
such as Club U in the Cardoza area of
I wonder who will find my little publication operation a threat to establishment interests!
It is sometimes said that the best antidote to capitalism is a true free market!
Author Mary Ruwart,
in Chapter 4, “Eliminating Small Businesses,” of Healing Our World (SunStar, 1992), shows that anti-small business regulation
(minimum wage, licensing and zoning laws, however they may pretend to be motivated by consumer
protection, livability or worker protection) harms lower-income people and
minorities. In her public speaking engagements, she advocates a concept of
voluntary certification (by trade organizations) instead of government licensing
laws, as a way to maintain a balance between professionalism and innovation.
Licensing and certification may become issues for small business owners in the
future, such as small
It’s also worth mentioning that communities can try to using zoning regulations (as have condominium and coop boards with their covenants) to prevent legally unrelated adults from living together. This usually comes up in conjunction with overcrowding of persons into apartment units or houses with inadequate square footage (in high cost areas) and has also come up in conjunction with illegal immigration.
Immigration regulation has affected labor intensive businesses (picking fruits) but also finding eldercare or custodial care, which is often provided by female immigrants who work as live-in home health aides. In turn, that can force other relatives to move or give up their own employment to provide care.
As for residential zoning, there has
been concern that some communities allow parceling of land for homes for blood
relatives but not for sale to the general public. This idea was originally
popular as a way to preserve family farms. Nikita Stewart and Nancy Trejos, “Zoning Laws are Looser for Some Family Ties:
Suburbs to Scrutinize Loopholes That Allow Dense Building,” The Washington Post,
In 2005, some communities (such as
Residential zoning laws have been
used for “moral” purposes. Martha T. Moore has a story on the
There is an interesting story by Janny Scott in The
New York Times,
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Any feedback considering absurd
zoning laws, send it to me at JBoushka@aol.com or