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Chicago a “dystopian nightmare” for business

Tuesday, May 20, 2014

* Matthew Yglesias

The US Chamber of Commerce Foundation put together a little pamphlet looking at municipal business regulations in 10 major American cities. They combine all the information into a somewhat arbitrary aggregate index, but some of the specific findings are striking.

For example, if you want to start a professional services business in Chicago you are basically facing a dystopian nightmare:

* If the accompanying chart doesn’t make you sick to your stomach, I don’t know what will…

32 days compared to five in heavily regulated San Francisco?

- Posted by Rich Miller        


42 Comments
  1. - RonOglesby - Tuesday, May 20, 14 @ 11:39 am:

    You can cut that down… If you know the right people.


  2. - Formerly Known As... - Tuesday, May 20, 14 @ 11:42 am:

    Crazy.

    Especially since this isn’t skewed against Chicago. It compares Chicago to other major cities, apples to apples.


  3. - Nonplussed - Tuesday, May 20, 14 @ 11:44 am:

    Heavily regulated San Francisco? If you are trying to build housing, yes. But otherwise, it is the start-up capital of the U.S.


  4. - wordslinger - Tuesday, May 20, 14 @ 11:45 am:

    Yet the startups keep coming to the dystopian nightmare.

    http://www.mediapost.com/publications/article/223518/chicago-la-colorado-digital-startups-boom-in-q1.html


  5. - Formerly Known As... - Tuesday, May 20, 14 @ 11:49 am:

    This

    == Chicago also makes this relatively expensive with $900 in permitting fees, but New York charges even more — $1,306. ==

    and this

    == Immigrants, for example, often find it especially burdensome to navigate a complicated permitting process because they don’t have as many language skills or local contacts as native born Americans. Chicago is responding to this with special programs to help immigrants deal with the system, but simplifying the system might be smarter. ==

    also stood out.


  6. - RonOglesby - Tuesday, May 20, 14 @ 11:49 am:

    @Word,
    Pro-services company vs money raised by startups (VC Backed). your showing an article with data that doesnt speak to the type of business being evaluated in the post.


  7. - VanillaMan - Tuesday, May 20, 14 @ 11:50 am:

    It takes less than a day in Houston, which is booming in population and business.

    This is Chicago.
    We don’t want your business.


  8. - RMWStanford - Tuesday, May 20, 14 @ 11:50 am:

    To some degree in Illinois when it comes to the business climate we focus to much on taxes and not enough on issues like this. There is little questions that Illinois needs to make itself more friendly to growth and start ups.


  9. - Commander Norton - Tuesday, May 20, 14 @ 11:55 am:

    Forgive me for asking an impertinent question, but are there social/economic/civil benefits to some of these regulations and costs to NOT regulating? Not all regulations are arbitrary, and the Chamber’s assumption that longer time periods and more procedures are necessarily a bad thing is simplistic.


  10. - walker - Tuesday, May 20, 14 @ 11:58 am:

    I thought “dystopian nightmare” might be a bit harsh, until I saw the chart. This is the kind of barrier Rahm has the personality to smash.


  11. - PublicServant - Tuesday, May 20, 14 @ 12:00 pm:

    Wouldn’t a balanced article ask Chicago officials for comments, or would that be too much work?


  12. - OneMan - Tuesday, May 20, 14 @ 12:01 pm:

    Well commander norton I will give an example…

    It costs $90 to form an LLC in Indiana vs $500 in Illinois vs $170 in Wisconsin.

    So if you are here and looking to start a small professional services firm (or even do something on the side) the ‘dealing with the government’ costs are much higher and might discourage some folks from doing it.


  13. - Formerly Known As... - Tuesday, May 20, 14 @ 12:01 pm:

    I had to look at a larger version of the chart in order to make sure that was a “32″ next to Chicago and not a “12″.

    This makes it appear Chicago succeeds “in spite of”, rather than “because of”, its regulatory climate compared to the city’s peers.


  14. - RonOglesby - Tuesday, May 20, 14 @ 12:02 pm:

    @commander
    Its hard to argue that we would be worse off in “Social/economic/civil benefits” if we made it faster to start a pro-services business… When compared to SanFran or NYC we are 4 or 5 x slower.

    Of course rich grabbed one piece of this. if you look at that actual article they grade for:

    Starting a business (time to start and licensing)
    Construction permits
    Registering Property
    Paying Taxes
    Contract enforcement (efficiency)

    Its actually an interesting look at the 10 cities.


  15. - RMWStanford - Tuesday, May 20, 14 @ 12:11 pm:

    Regulations are not always written with the best interest of soceity in mind, in some cases they end up written in way that protects existing businesses at the cost of new business ( ie possible compeitors)


  16. - Chicago Cynic - Tuesday, May 20, 14 @ 12:13 pm:

    I really don’t understand this. It hasn’t been my experience (I own and run a prof svcs firm in Chicago) nor has it been the experience of people I know.


  17. - Pete - Tuesday, May 20, 14 @ 12:15 pm:

    When Rahm sees this, the fee will increase from $900 to $1305.


  18. - Chicago Cynic - Tuesday, May 20, 14 @ 12:15 pm:

    Ok - Ron Oglesby - that explains it. You have to do none of those things to start a business when you’re renting. You pay your landlord and they take care of those things so this seems like a very misleading piece.


  19. - RonOglesby - Tuesday, May 20, 14 @ 12:17 pm:

    The 25 days of waiting for a license in the mail seems Sirius useless.


  20. - Will Caskey - Tuesday, May 20, 14 @ 12:19 pm:

    That really depends on what kind of professional services you’re talking about. If it’s not a category the city regulates then there are no permits required and you can set up in a day or so (expedited incorporation + FEIN application, voila).

    It should also be noted that the current mayor has drastically reduced the number of required licenses: http://www.cityofchicago.org/city/en/depts/mayor/press_room/press_releases/2012/april_2012/mayor_rahm_emanuelannounces60percentreductioninlicensetypestohel.html


  21. - A guy... - Tuesday, May 20, 14 @ 12:29 pm:

    Anyone who had tried to open business here would tell you this report is optimistic. For real entertainment, look at small manufacturing or retail, something other than professional services. Pro services is the quickest business to open. Anywhere but Chicago of course. This is absolutely real, repressive and depressing. The labor force here remains attractive. And the location. Without both those factors, we’d have almost nothing going for us. Everything takes forever.


  22. - Formerly Known As... - Tuesday, May 20, 14 @ 12:29 pm:

    == It hasn’t been my experience (I own and run a prof svcs firm in Chicago) nor has it been the experience of people I know. ==

    True question, no snark: How were you and those you know able to do things so much more quickly than most others?

    Do other people just not understand all the rules and procedures in Chicago as well as you and they do? Is the Chamber’s work mistaken somehow? Is there no problem at all in your opinion? Is it the RonOglesby factor concerning “who you know”? What would you say accounts for your experience being so much different than (apparently) most others?

    Also, best wishes for prosperity towards your business.


  23. - Chicago Cynic - Tuesday, May 20, 14 @ 12:33 pm:

    True answer - when I set up my business, I did it the normal way - no special access or favors. As Will Caskey said above, if you’re talking law, marketing, accounting, PR, other kinds of generic professional services, it’s easy as pie to do it in Chicago. I can’t speak for retail or manufacturing or worse, hospitality.


  24. - Almost the Weekend - Tuesday, May 20, 14 @ 1:00 pm:

    =Forgive me for asking an impertinent question, but are there social/economic/civil benefits to some of these regulations and costs to NOT regulating? Not all regulations are arbitrary, and the Chamber’s assumption that longer time periods and more procedures are necessarily a bad thing is simplistic.=

    These statements are very frustrating on this blog. I love Chicago and am pro-Illinois all the way, but this statement is just an assumption with no research or details to support it. San Francisco and Los Angeles are both cities in California, which receives terrible reviews from groups like the Chamber of Commerce, yet they are on the same level to Dallas, a city in Texas, a stte the Chamber of Commerce adores. I think the link below shows why it takes 32 days in Chicago.

    http://www.chicagobusiness.com/article/20130807/BLOGS02/130809833/ford-dealer-held-up-by-politics-gives-chicago-a-deadline


  25. - Almost the Weekend - Tuesday, May 20, 14 @ 1:02 pm:

    For people who dont have a subscription, here is another link from this blog last year.

    http://capitolfax.com/2013/08/08/the-chicago-way-2/


  26. - Chi - Tuesday, May 20, 14 @ 1:03 pm:

    My experience is in line with Chicago Cynic. And the chart says “professional services”. So I don’t understand how they got to 32. Again, I don’t doubt it may be more difficult to open a bar, restaurant, widget factory, etc.


  27. - horse w/ no name - Tuesday, May 20, 14 @ 1:29 pm:

    Don’t worry about this Mr. Mayor or City Council. Let’s get back to banning plastic bags and e-cigarettes and building a Star Wars museum


  28. - ArchPundit - Tuesday, May 20, 14 @ 1:29 pm:

    4 Days in Saint Louis–bawaaaa…sure…and I have the Eads Bridge to sell you.


  29. - OldSmoky2 - Tuesday, May 20, 14 @ 1:48 pm:

    And yet corporations keep coming to Chicago and moving headquarters here, Chicago’s gross metropolitan product is larger than most states and many countries, and Chicago continues to be ranked by business insiders as one of the top 10 places in the world to do business. Hmmm… I guess these dumb business leaders are just too focused on making money to listen to the political partisans who are running the U.S. Chamber these days.


  30. - Demoralized - Tuesday, May 20, 14 @ 1:52 pm:

    It on only took God 6 days to create the entire world.


  31. - Formerly Known As... - Tuesday, May 20, 14 @ 2:05 pm:

    Chicago Cynic - thanks for adding some details. I meant “true question” as in “please understand I am not attempting to assume or imply anything about why the experience of you and those you know has been so different from most”

    The experience of some people, such as yourself and those you mention knowing, is apparently much different than the Chamber’s findings and the normal experience of others in Chicago.

    Asking why you think that is was basically a way of asking how you think we might help others have the same experience you have.


  32. - A'mous - Tuesday, May 20, 14 @ 2:26 pm:

    The bigger problem is that it takes decades to overcome a bad reputation. Just ask Decatur


  33. - Illiana - Tuesday, May 20, 14 @ 2:29 pm:

    I would like to see what the figures would be in Joliet & Naperville.


  34. - Shark Sandwich - Tuesday, May 20, 14 @ 2:34 pm:

    It’s nothing to be proud of, but ‘dystopian nightmare’ is just hyperbole. It’s not like Rahm is sending out murderous search parties to find the last copy of the bible…


  35. - Enough - Tuesday, May 20, 14 @ 2:53 pm:

    Must not be too bad since Illinois is the 4th largest manufacturing state.


  36. - 47th Ward - Tuesday, May 20, 14 @ 3:27 pm:

    Chicago takes its zoning laws pretty seriously, as opposed to say, oh I don’t know, Houston, which doesn’t seem to have zoning laws from what I’ve seen.

    If you need to change the property’s zoning as part of your business plan, then yeah, it’s going to take a while. 32 days is optimistic in that regard, but hardly unreasonable.

    I’m not sure the Cubs qualify as a professional services firm (they’re professional losers recently), but take a look at how long they waited before the could do what they wanted to do on their own property.

    Plus, we’ve got 50 Alderman looking for a piece of the action. If we approve these businesses too quickly, how are they going to feed their families?


  37. - Chris - Tuesday, May 20, 14 @ 3:39 pm:

    “Houston, which doesn’t seem to have zoning laws from what I’ve seen”

    Doesn’t have zoning laws, period.


  38. - Steve - Tuesday, May 20, 14 @ 4:47 pm:

    Just a remember , Matthew Yglesias wrote this for Vox. When you’ve lost Matthew Yglesias you are in trouble. He’s an official “off the books” press operative for Barack Obama at Vox. He gets special briefings at the White House from Obama himself. So, you aren’t talking about some libertarian type here bad mouthing backward Chicago. You are talking about an errand boy for Barack Obama.


  39. - Anyone Remember - Tuesday, May 20, 14 @ 5:00 pm:

    Sometimes “excessive regulation” is a result of dealing with past problems like organized crime. For example, one (of many) reasons taxis are so highly regulated:
    http://en.wikipedia.org/wiki/John_C._Montana


  40. - Mama - Tuesday, May 20, 14 @ 9:58 pm:

    It could be due to under-staffing by S.O.S. in the business dept.???


  41. - Precinct Captain - Tuesday, May 20, 14 @ 11:20 pm:

    ==Just a remember , Matthew Yglesias wrote this for Vox. ==

    If you’re a longtime Yglesias reader, you’d know he has been against the concept of widespread professional licensing schemes for a long time.


  42. - Johnny Utah - Wednesday, May 21, 14 @ 11:49 am:

    Starting your new business and competing with the established players is a crime here in Chi-town.

    If you do the crime be ready to do the time! Simple as that!


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