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State licensure: Boon or boondoggle?

March 3, 2014 -  By

scales-of-justiceIf you want to get a vigorous debate going among a group of landscape contractors, ask them how they feel about state licensure for our industry. The opinions are deeply held and wide-ranging.

On the positive side, many see state licensure as a way of keeping the “trunk slammers” out of the business and providing a basic level of professionalism to the industry.

On the negative side, others see state licensure as an unnecessary intrusion of government into their affairs, with increased costs, bureaucracy and red tape in an already complex business world.

The crux of the debate is our industry has relatively low barriers to entry. Anyone with a pickup truck, a few basic tools and the desire to work hard can get started in our industry.

There is an upside and a downside to these low-entry barriers. On the upside, I know many successful entrepreneurs—now with multimillion-dollar companies—who got their start with nothing more than a pickup truck and a lawn mower.

On the flipside, many get into landscape contracting and never develop as professionals or businessmen. They fly under the radar competing on the basis of price and undercutting their competition. They keep their costs low by avoiding taxes, workers’ compensation, liability insurance, environmental regulations and other business costs borne by legitimate, law-abiding landscape contractors.

This problem became especially acute during the last recession, when folks who were out of work in other industries decided to take up landscaping as a new career. This flooded the market with new landscape companies with little experience, competing on the basis of price. Many of these businesses didn’t last long, but inflicted considerable damage to the market before they folded.

Those supporting state licensure see it as way of creating a barrier that can keep out the worst of our industry and assure a basic level of professionalism and business standards.

Does licensing work?

The question is, does state licensing work?

In theory, it can. But in the real world of politics, bureaucracy and tight state budgets, it often does not.

Many states have some form of state licensure or registration for landscape contractors or home improvement contractors. California, Oregon and North Carolina have among the most robust landscape contractor licensing programs, which are governed by a board of professionals selected from the industry, require a written exam and periodic renewal of the license.

At the other end of the spectrum is Pennsylvania, which requires only completion of a simple online form and payment of a biennial registration fee.

Enforcement is key

The key to any licensing program’s effectiveness is enforcement. Regardless of how well the program is designed, if it is not enforced, it will not work. And this is where many of these programs fail.

Enforcement is expensive, which is often a fact that legislators don’t take into consideration when establishing these programs. And even if they do, budget problems after the program is implemented can hamstring the most well-designed enforcement program. Most times, legislators look at enforcement as someone else’s problem to solve.

In Pennsylvania, for example, when our state contractor registration bill was passed, there was no budget for enforcement. The program was loaded onto an already overburdened attorney general’s office. When the attorney general sets investigation and prosecution priorities, where do you think unregistered landscape contractors will stack up against drug dealers, cybercrimes and child porn?

Even California’s robust licensing program was neutralized for a time when, during a budget crisis, then Governor Arnold Schwarzenegger “borrowed“ the funds dedicated from license fees to help patch holes in other parts of the budget.

Licensing can make matters worse

When a licensure program is not adequately enforced the “underground” segment of the industry quickly figures this out and decides they are better off keeping their heads down. After all, this is their well-honed business model.

Meanwhile, the legitimate companies will step up, pay the licensure fees and bear the costs of taking the exam. And the competitive cost disadvantage of the legitimate contractor will become worse.

So where do you stand on state landscape contractor licensing? Tell me.

Photo: Karen Arnold/PublicDomainPictures.net

About the Author:

Gregg Robertson, Landscape Management's government relations blogger, is a government relations consultant for the Pennsylvania Landscape & Nursery Association (PLNA) and president of Conewago Ventures. From 2002 until May 2013 he served as president of PLNA. Reach him at gregg.robertson@conewagoventures.com.

2 Comments on "State licensure: Boon or boondoggle?"

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  1. Jered says:

    Gregg,

    You nailed it. Out of work? Got a truck and a wheel barrow/lawn mower? You’ve got yourself a low cost entry into the landscape industry. Now all the local established business have to compete with one more yahoo and better hope they’ve developed a strong relationship with your accounts.

    I’m not a fan of unions but there is something to be said for them. Maybe if the landscape industry had a union things would change for the better. But then you pay the state/feds and the union – there goes some of the bottom line. It’s almost a no win situation.

  2. Gregg Robertson says:

    Jared,

    Thanks for the feedback! Those in our industry that thought that they could turn to government for help through licensure are finding that it increases costs and doesn’t do anything to keep the bad actors out, mainly due to weak enforcement.

    I have no quarrel with those that get into our business with a truck and lawnmower and follow the rules. But not all do and therein lies the problem.

    Gregg