Chicago has been losing businesses for more than a decade, and its lawmakers recently gave proprietors another reason to flee.
Despite Mayor Brandon Johnson’s 2024 initiative to “Cut The Tape for Small Business,” as well as 15 city council members’ support of a plan to lower legal hurdles for business owners, some business license fees just increased by as much as 400%.
Lawmakers attribute these hikes to a need for more revenue, but history and common sense show this tactic backfires. A city already suffering above-average and rising unemployment cannot afford to further disenfranchise the people creating jobs.
Small Business Impact
Since the COVID-19 pandemic in 2020, businesses with fewer than 50 employees have been the only generators of new jobs in Chicago; of those businesses, 99% had fewer than 20 employees. In total, they added 174,000 jobs to the workforce. The magnitude of their importance to workers and the economy at large can hardly be overstated.
A larger company might not suffer noticeably at a fee being quadrupled, but the higher cost can be the end of a smaller one. Licensing fees present a disproportionate burden to small businesses. Many fees are not scaled for size, so they particularly devastate the smallest.
These owners cannot shoulder this weight, and the city of Chicago cannot shoulder the weight of more unemployed residents.
Fleeing Owners
In 2015, 54,135 licensed businesses called Chicago home. By 2024, that number had fallen to 44,840, a 17% drop.
The overall Chicago population also fell by 27,000 between 2020 and 2025—despite the addition of 238,000 immigrants during that time.
People exiting give multiple reasons, but an unfriendly business environment is a significant factor. Trying to raise funds through higher business licenses adds to the very problem causing the exodus.
The Whole Picture
As significant as they are, higher license fees for individual businesses do not illustrate the complete licensing burden. The bigger picture also includes the number of business types required to pay them, the number of individual license types mandated for each business, the licenses each individual employee must obtain, and a multitude of other facets.
Added together, these figures illustrate a serious problem for Chicago. Most businesses in the city require at least one type of license, and Illinois ranks fourth in the country on the list of most heavily regulated states compiled by George Mason University’s Mercatus Center. Residents in the already waning market are being disincentivized from starting or continuing a business.
Conclusion
Creating barriers for owners affects not only them, but also would-be employees who miss out on jobs never created, as well as the customers who pay increased prices passed on to them by proprietors. Chicago leadership must stop hamstringing residents if it wants the city to recover.
As Chicago comptroller Susana Mendoza counseled in response to this fee increase: “I think that rather than punish our business community for creating jobs which are necessary for people’s quality of life, we should be partnering with our business community and not creating policies that, frankly, chase them away pretty quickly.”
Other lawmakers should take note. Blue states are losing residents and businesses to red areas at a staggering rate, and both economists and business leaders cite regulation-driven costs as a key contributing factor. Economic freedom provides the most welcoming environment for owners and customers alike. Legislators can either choose to embrace this reality or face further losses.