Florida is the most entrepreneurial state in the nation, based on recent research examining the percentage of the population starting a new business, the percentage of startups still active after a year, the number of small businesses per 100,000 people, and the growth rate of business applications. The U.S. Census Bureau’s Business Formation data show that Florida is leading the nation with 57,299 new business applications last month alone. Florida’s rates of new entrepreneurship outpace those of the more populated states of California and Texas and the quite large New York and Pennsylvania. Florida’s entrepreneurship and job-creation boom is directly linked to a set of policies implemented by the state, first to cultivate a rich macro-environment (designed to keep inflation down and encourage active participation in the workforce) and, second, to catalyze small-business development.
Nearly three years after enactment in the 2021 legislative session, the following four Florida business policies are proving extremely effective and should be implemented in other states: home-based business, fast-track building permit, preemption of local licensing laws, and performance measures for workforce programs. Let us elaborate on these in turn.
More than half of all American businesses are home-based. Indeed, many successful firms, such as Amazon, Spanx, Minecraft, and Google, were started by people working out of their homes. Home-based entrepreneurs not only keep their costs lower and enjoy greater quality of life but also create 64 percent of new jobs, according to the Small Business Administration. Home-based businesses enable financial independence for aspiring entrepreneurs across gender and race, while also helping to balance other responsibilities, such as elder and young care. The Florida state legislation also removed barriers to business formation, such as local regulatory restrictions. Less successful states have a labyrinth of regulations on such minutiae as industry types, floor space, and fee assessments.
The Florida Legislature also recognized that fast-tracking business permits can help businesses to open (and, in many cases, reopen). It established an online status-tracking process and minimum processing time for local government issuance of building permits. This new legislation includes refunds if local governments fail to issue timely permits. The result is that development costs are lower, thereby encouraging business growth. By contrast, many states and cities without such focus and monitoring never meet their timeliness goals.
The third prong is the preemption of local licensing laws. Occupational licensing constitutes a 3 percent to 16 percent tax on the consumer and is extremely arbitrary across states. Recognizing that any occupational classification for health and safety reasons should be statewide to ensure consistent standards, the Florida Legislature prohibited local governments from developing and enforcing any local licensing requirements. Across the country, egregious local licensing requirements are common, such as New York City’s requirement for dog sitters and Detroit’s requirements for window washers and landscape gardeners.
Finally, Florida’s commitment to performance measures for workforce programs has created accountability to taxpayers and efficiencies for job seekers and the business community as a whole. Florida now requires state and local programs to use common intake forms and case management systems to stimulate more efficient job search and placement.
While the concern of our Founding Fathers over the appropriate balance between state and federal sovereignty has understandably become a headline-grabbing issue in our fractured political environment, let us not forget that those founders also understood states to be key sources of policy innovation. As Thomas Jefferson wrote in a letter to a colleague, “The way to have good and safe government, is not to trust it all to one, but to divide it among the many, distributing to every one exactly the functions he is competent to.”
States are the laboratories of democracy. Successful policies, such as Florida’s four-pronged approach to fostering entrepreneurship, are a canonical example. Ideally, these successes will be picked up and spread in other states.
