Licensing reform by the states will lift Americans from poverty
Presidents Barack Obama and Donald Trump don’t have much in common, but even they agree that occupational licensing laws do the American people more harm than good.
In 2015, the Obama administration released a set of best practices for states to use to reform their licensing laws. Now the Trump administration is following up, with The President’s Principles on Workforce Freedom and Mobility to guide state reforms – tenets that will uphold public safety and ensure consistency while respecting states’ prerogatives on the issue.
Occupational licensing requirements impose burdens on American workers with little benefit. According to the Institute for Justice, they could be depriving our country of anywhere from 1.8 million to 1.9 million jobs and the economy $6.2 billion to $7.1 billion each year.
For many lower-income workers, the costs in time and money are prohibitive. If you want to be a barber in Alaska, you need to pay $450 in government fees, complete 1,650 hours of training or 2,000 hours in an apprenticeship program, and pass two exams – which does not even include childcare or time off work. In Vermont, it’s $360, 1,000 hours of training, 2,000 hours experience, and three exams. The government-mandated training costs thousands of dollars, and after all that, you’ll have to renew your license in two years (paying another $180 in Alaska and $130 in Vermont for every renewal).
Licensing laws are barriers that can put your dreams on hold for years. They also make us less safe. Individuals who have made mistakes in the past, served time in prison, and paid their debt to society have difficulty finding work because of licensing laws. On the other hand, states that remove these barriers allow more of the formerly incarcerated to find employment and become productive members of the community, reducing recidivism and making our country a safer place to live.
While licensing laws may have been well-intended, they’ve devolved into yet another example of government imposing top-down, ineffective solutions. Not only do these policies hurt the most vulnerable among us, the myriad of state laws has created an inconsistent and confusing web of requirements across the nation.
For example, Wisconsinites who want to be professional shampooers must go through a gauntlet of requirements, including $391 in fees, to be licensed, but in nearby Indiana shampooers don’t need to be licensed at all.
Similarly, Iowans who want to be dental assistants also face onerous rules to be licensed, and yet in neighboring states – Illinois, Missouri, Nebraska, South Dakota, and Wisconsin – once again, no license is required for the same work.
The obvious question is whether Wisconsinite hair is uniquely hard to shampoo or Iowan teeth uniquely difficult to clean – there’s no evidence to back up either proposition. It also seems that their neighbors are doing fine without these laws.
By imposing arbitrary rules, Iowa and Wisconsin have given their own residents incentive to take their talents elsewhere.
Many also are the result of well-connected industries lobbying politicians for protection from new competitors. Politicians have been obliging, granting special privileges to industries as varied as hair braiding, interior design and health care. Although there have been some promising state-level reforms in the past couple years, the trend over the past 70 years has been toward more restrictions. In the 1950s, one in 20 American workers needed an occupational license – today, it’s one in four.
Supporters argue that the restrictions ensure quality and safety standards. If that were the case, they might be worth it. But even the otherwise regulation-friendly Obama administration admitted in its study that “most research does not find that licensing improves quality or public health and safety.”
This is a state question, not a federal one. But that doesn’t mean that in this instance the federal government isn’t offering sound advice.
The administration’s push for reform gives state legislators across the country a chance to lift burdens off their constituents, enabling them to find meaningful work and better their own lives.
We urge state representatives to reverse the trend toward ineffective, cronyistic, protectionist, and arbitrary restrictions and enact bold and innovative transformative licensing reforms. In doing so, they will not only expand opportunity but will demonstrate, in a time of intense partisan rancor, what happens when Americans of all stripes unite to do good.
Erica Jedynak is director of employment initiatives at Americans for Prosperity.