Op-Ed: Home-Based Businesses Are Coming

With the rapid spread of Covid-19, working from home is having a moment. With most major cities now under stay-at-home orders and nonessential businesses closing down across the country, millions of Americans are working remotely for the first time. Will it stick?

Indeed, even before the coronavirus and self-quarantining, more and more Americans have been running businesses from home. According to recent research, the number of home-based businesses nearly doubled between 1992 and 2012, constituting one in six businesses by 2014. Evidence from this period indicates that such businesses are more likely to be run by people otherwise excluded from conventional work: single parents, the disabled, the unemployed, and caregivers, among others.

The steady rise of home-based businesses has clearly escalated in recent years. Pull up Google Maps for any suburban neighborhood and see for yourself. In one neighborhood in Lexington, Kentucky, for example, notification bubbles rise above a half-dozen single-family homes for businesses such as African hair-braiding, artisanal candle-making, and software development. Though growing, such home-based businesses remain largely invisible, in part because they are often illegal under current zoning laws. In addition to the risk of fines and penalties, this leaves many home-based entrepreneurs unable to secure financing to expand their businesses.

In a study for Utah State University’s Center for Growth and Opportunity, we explored these regulatory barriers to entrepreneurship and possible avenues for reform. The challenge for home-based businesses, it turns out, is that many zoning ordinances were written before World War II. As a result, the provisions regulating when and how people can work from home are often antiquated. Few current lists of permitted businesses even mention the Internet.

Read the full op-ed at City Journal

CGO scholars and fellows frequently comment on a variety of topics for the popular press. The views expressed therein are those of the authors and do not necessarily reflect the views of the Center for Growth and Opportunity or the views of Utah State University.