News Story

Citing State Regulatory Burdens, Man Closes Small Business

‘Navigating an unreliable system is despair-inducing’

A small-business owner providing pool repair services in the suburbs south of Detroit gave up on his career and shut down the business after experiencing burdensome and costly licensing regulations from the state.

The former business owner, Adam Alexander, suggested that special interest groups were behind the tedious licensure requirements.

“Being forced to buy a trivial class is degrading,” Alexander said in a letter he posted on his website and sent to state legislators. “Wasting so much time is demoralizing. Navigating an unreliable system is despair-inducing.”

Alexander ran a small business that focused on pool and hot tub repair, but it also included other home repair and leak-detection services. The business, formerly in Southgate, was called No Worries Pool & Spa. Without a license, Alexander was allowed under state law to do residential jobs that were worth $600 or less. For bigger jobs, he needed to acquire a residential builder license.

The cost of the classes, the test and the license he needed amounted to nearly $900. The largest financial burden came in the time required to study for the test. Taking time off work to study for it cost him at least $10,000 in income, he said.

“The study material covered a vast range,” Alexander said in his letter. “I had to learn about scaffolding that I had never seen on a construction site. … I learned about steel wire rope for cranes though I’ve never had plans of buying one. I learned about storing diesel in stationary tanks though I've never seen such a tank on a residential build. I spent [hundreds] of hours memorizing construction trivia of the world.”

Alexander said much of the material contained in the test was not necessary because, as a contractor, he would simply look up codes that he did not have memorized. Additionally, a lot of codes he was required to memorize were not likely to apply to his line of work, he said.

“Essentially, it was a lot of information that just doesn’t apply to the real world,” he said. “It was as if a group of people who don’t know anything about construction made a test about what they think construction is about.”

When Alexander thought he had finally navigated the red tape, he found out that he would be required to take an additional 21 hours of classes within his first three years of acquiring the license, and then another 21 hours in years four through six.

With the continuing cost and time associated with a license, and because it had become virtually impossible to make a living from $600-or-less jobs, he decided to close his business. His next step was to take up a job splitting firewood in a minimum wage job. Although he was offered a position as a boom truck operator and could work in the construction field under a larger company, he said he believed special interests were behind these regulations, and he refused “to facilitate this corruption.”

The regulations that cost Alexander his business were proposed in 2007 by two state senators, a Republican and a Democratic. Though the Office of Regulatory Reinvention advised the state to eliminate the pre-license class requirement in 2012, legislators reaffirmed it in a 2013 bill introduced by former State Rep. Frank Foster, R-Petoskey. It passed in a bipartisan fashion, receiving only one “no” vote in the House and one “no” vote in the Senate.

Jarrett Skorup, director of marketing and communications at the Mackinac Center for Public Policy and author of a report on occupational licensing, said that burdensome licensing laws are a serious problem throughout Michigan.

“More than 20 percent of the workforce in Michigan is required to have a license to work,” Skorup said. “This equals nearly a million jobs and has been growing.”

Skorup said that Michigan requires licenses for occupations that many states do not, such as painters, roofers, hair shampooers, teeth whiteners and potato dealers. He said the Legislature should pass legislation to reduce these burdens.

Alexander said that he wishes legislators would end the construction class he called “a complete waste of time” because the reading materials and test questions don't properly reflect the job.

In a 2015 study, the Pacific Research Institute, a California-based free-market policy nonprofit, ranked Michigan in the bottom half of U.S. states for its burdensome regulatory requirements, at 28th.

Michigan lawmakers are considering legislation that would review current state mandates, allow more people to have access to licensed work by removing barriers faced by some ex-offenders, and prevent local governments from adding on their own regulations.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.