Occupational Licensing Reform is Not a Partisan Issue

by on September 26, 2019 · 0 comments

by Adam Thierer and Trace Mitchell

This essay originally appeared on The Washington Examiner on September 12, 2019.

You won’t find President Trump agreeing with Hillary Clinton and Barack Obama on many issues, but the need for occupational licensing reform is one major exception. They, along with many other politicians and academics both Left and Right, have identified how state and local “licenses to work” restrict workers’ opportunities and mobility while driving up prices for consumers.

Of course, not everybody has to agree with high-profile Democrats and Republicans, but let’s at least welcome the chance to discuss something important without defaulting to our partisan bunkers.

This past week, for example, ThinkProgress published an article titled “Koch Brothers’ anti-government group promotes allowing unlicensed, untrained cosmetologists.” Centered around an Americans for Prosperity video highlighting the ways in which occupational licensing reform could lower some of the barriers that prevent people from bettering their lives, the article painted a picture of an ideologically driven, right-wing movement.

In reality, it’s anything but that.

Occupational licensing has expanded significantly in the past several decades. It began as a relatively uncommon regulatory approach aimed at ensuring public safety and reserved for only those occupations that pose the greatest risk of harm or abuse. Now, it’s a fairly standard means of regulating all kinds of industries.

In the 1950s, around 5% of workers needed a license to perform their jobs. Today, it’s over 30%. This drastic change has raised concerns from people at virtually every point along the political spectrum.

In fact, one of the most crucial reports on occupational licensing was created by the Obama administration. It found that while occupational licensing can lead to higher quality services for consumers, “by making it harder to enter a profession, licensing can also reduce employment opportunities and lower wages for excluded workers, and increase costs for consumers.”

Last year, the independent Federal Trade Commission followed suit, releasing a report highlighting the negative effects of occupational licensing and proposing ways to combat them by making worker licenses more portable across state lines.

Hillary Clinton has also expressed support for targeted occupational licensing reform. In 2016, she released a set of policy proposals aimed at helping small businesses which included a goal to “streamline unnecessary licensing to make it less costly to start a small business.”

Fellow Democrat Joe Biden has talked about overly burdensome occupational licensing. In his words, “They’re making it harder and harder in a whole range of professions, all to keep competition down.”

In addition, groups across the ideological spectrum, including the Brookings Institution and the American Civil Liberties Union, have expressed concern over the costs of burdensome work requirements.

President Trump, a critic of the Koch brothers, has also shown support for occupational licensing reform. He recently praised Arizona Gov. Doug Ducey for his state’s new approach, saying, “We hope that other states are going to follow Arizona’s lead.”

Why are all of these people and organizations, with fairly distinct perspectives and goals, concerned about the same issue? Because occupational licensing is really costly, and those costs often fall upon the most vulnerable and disadvantaged Americans.

The report issued by the Obama administration found that occupational licensing serves as a hidden tax on consumer goods and services, increasing prices by anywhere between 3 and 16%. The report went on to assert that these costs fall disproportionately on certain segments of the population: immigrants, military spouses, and reformed convicts. Other research supports these findings.

Economist Morris Kleiner found that “restrictions from occupational licensing can result in up to 2.85 million fewer jobs nationwide, with an annual cost to consumers of $203 billion.” Once again, these costs are not evenly distributed: Our colleague Matt Mitchell looked at the effect of occupational licensing on the poor and disadvantaged, finding that it can “disparately affect ethnic minorities and other specific populations.” Forcing barbers to obtain a license “reduces the probability of a black individual working as a barber by 17.3%.”

Propelled by the weight of the evidence, policymakers are starting to work together. It isn’t ideological; it’s just good policy. Isn’t that what we want?

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