Missouri, Kansas Cited for Barriers to Entry Among Low-Income Entrepreneurs

Kansas City may want to think of itself as the Entrepreneurial Capital of America, but if it is, it’s an oasis in a two-state desert of regulations that stifle entrepreneurship among the poor.

That’s according to a new report assessing conditions that prohibit low-income residents from becoming entrepreneurs. It ranked Missouri No. 44 and Kansas No. 46, suggesting that residents of the two states face greater barriers if they hope to escape poverty by opening their own businesses.

The study was authored by Stephen Slivinski, a senior research fellow at Arizona State University’s Center for the Study of Economic Liberty. It found that, in general, states with more occupations requiring licensure and other conditions for start-up had lower rates of entrepreneurship. Slivinski, relying in part on data from the Kauffman Foundation, found that Colorado, Vermont and New Mexico had the highest levels of entrepreneurship among low-income residents, each exceeding a rate of 700 low-income entrepreneurs per 100,000 population.

Kansas, by contrast, had just 180 low-income entrepreneurs per 100,000 residents, while the rate for Missouri wasn’t much higher, at 220 per 100,000. Mississippi easily brought up the rear among the 50 states, with a rate of 100 per 100,000.

The report offered a broad policy solution: “Reforms to state occupational licensing laws are vital to improving the rate of entrepreneurship among low-income workers,” it concluded. “Those reforms should include the sunsetting of existing licensing arrangements and the creation of a private certification system to replace the current government-driven one.” 

You can read the whole report here