Are you interested in becoming an interior designer? There’s a license for that. Did you ever want to be an oyster salesman? There is a license for that, too. Are you thinking of pivoting into the auctioneer business? You’re going to need a license.
Job ads that sound like caricatures of genuine employment opportunities for low-to-moderate-income workers are a bad sign. Occupational licensing is intended to help protect the health and safety of consumers. Overly broad restrictions, however, undermine individual liberty.
As we at the Texas Public Policy Foundation note, occupational licensing causes employment shortages, inhibits competition, and artificially raises the cost of products and services for the consumer. Such onerous labor laws also result in an estimated 2.8 million fewer jobs in the U.S. labor market and $203 billion annually in higher costs to consumers. To contextualize the level of regulatory nitpicking in Texas alone, athletic trainers and florists are just two of 774 occupations in the state as of December 2020 that require a government permission slip to work.
And yet the correlation between occupational licensure and quality of service or customer satisfaction is often dubious at best. Businesses are painfully aware that Yelp is the real sword of Damocles. The proliferation of channels such as “One Star Reviews” from Vice is another good indication that the fate of some businesses are better left to the discretion of the free market’s invisible, digital hand anyway.
Some states are considering innovative solutions to excise administrative micromanaging.
Utah, a state with some of the most Byzantine employment laws in the country, is getting ahead of burdensome occupational licensing rules. At long last, the Beehive State (aptly named for its diligent workers and resilient industries) is considering the shift to a universal licensing policy—a page out of Arizona’s playbook. Universal licensing allows a state such as Utah to recognize an out-of-state occupational license if a prospective worker meets common-sense standards for that occupation in Utah.
One example of this practice is in Ohio where food truck licenses from other states are considered valid if the mobile food vendor has held a license for more than a year. This policy is especially effective because work experience is approved by the state without duplicative training, testing, or application fee requirements. That also lends credence to the basic principle of licensing reciprocity— if one state recognizes a legitimate license issued in another state, then the other state should be able to recognize the license from the first state.
But some states do not agree on common sense standards. For example, taking exams are standard procedure for a general contractor license in California, but might be considered terribly superfluous in Connecticut, where exams are not required.
Interstate discrepancies like this suggest that the characteristics of an occupation that warrant a trip through the bureaucratic wringer are ill-defined across the country. When that happens, both the general contractors and their clients get a lousy deal. Universal licensing cannot streamline employment eligibility as much as the name suggests if there are different requirements for in-state versus out-of-state license applicants.
Texas should be above the regulatory wrangling.
The Lone Star State can start by recognizing the wisdom of consolidating work experience requirements between states and ensure that sunset committees, which assess the need for licensing statutes on a continual basis, uphold reciprocity agreements with other states—and even between state agencies within Texas.
Additionally, Texas lawmakers might want to consider making licensing requirements proportional to the long-term effects of a licensed professional’s product or service after it has been rendered. Regulatory limitations should also reflect the immediate risk of death or irreparable harm that inadequate services may cause. That way, low-risk trades like that of manicurists are not burdened with extensive licensing requirements (the only performance metric they really need to mind is their ranking on Google reviews).
More concrete applications of this practical policy include the governor’s waivers during the COVID-19 pandemic and last year’s freeze as well as the for school bus drivers to test their under-the-hood knowledge of school bus engines. These are just a few small steps for the state, but they can be giant leaps for those regulated.
Texas, a famously business and job-friendly state, also made tremendous legislative strides last session when it deregulated the polygraph industry and wig stylists. There is yet room for more improvement. It is imperative to transition away from vestigial regulations and toward useful tools like universal licensing.
For more information on reducing barriers to work, check out the Alliance for Opportunity’s website www.allianceforopportunity.com.