Land of the Free?

50 state study on how professional licensing laws lead to fewer jobs

From Wisconsin Institute for Law and Liberty November, 2017

EXECUTIVE SUMMARY

Occupational licensing laws, or state permission slips to work in certain regulated professions, serve as a major barrier to entry for workers in America. For aspiring cosmetologists, manicurists, massage therapists, and aestheticians, licensing requirements can mean thousands of hours of training, tens of thousands of dollars for school, and regular fees to the state. These laws force people with skills and aspirations to take on debt they cannot afford, defer their dreams, or conduct their trade underground with the accompanying threat of fines and prosecution.

In 1950 just 1 in 20 workers required a license to work, now close to 1 in 4 do. With more professionals, and aspiring professionals, running into licensing laws, the case for reform has found an increasingly broad and diverse audience. Coalitions of liberal and conservative activists and policy experts, Democrat and Republican governors, and the Obama and Trump administrations have all embraced the cause of licensing reform. And while progress has been made in this reform movement, rigorous research into the effects of licensing on workers and the broader economy are still in their infancy.

This peer-reviewed1 study examines, for the first time, the impact of licensing requirements across the country on ten low and moderate income professions. For each state we created a Red Tape Index which measures the license requirements, i.e. fees, training hours, exams required, and minimum age, for ten professions. Then we looked at how employment related to a state’s score on the Red Tape Index.

Our findings include:

1. States with more burdensome licensure requirements (fees, training hours, exams, and age requirements) had significantly lower employment in the ten professional occupations.

2. Our models show that 23 states could see employment growth of 5% or above for these ten professions if they lowered their licensing laws to those of the least burdensome state – Hawaii.

3. Tennessee, Alabama, Nevada, Florida, and Wisconsin are ranked as the most burdensome states for the professions under study.

4. Hawaii, Massachusetts, Connecticut, Rhode Island, and Utah are ranked as the least burdensome states for the professions under study.

5. We estimate that employment in the U.S. for those ten professions would increase by 4.5% if licensing regulations were reduced to the level of the least burdensome state (Hawaii).

Our study shows whatever benefits regulation might bring must be weighed against the cost to those who are trying to make their way in the world and feed their families. Policymakers must consider if the current protections licensing provides are worth the price of lower employment. The results of this report provide opportunity advocates with the statistics to make the case that the current system of licensure has overcorrected and increasingly serves to cripple the dreams and aspirations of real people.

read … Full Report 

Daily Signal: New Study Shows Licensure Laws Kill Jobs in All 50 States

WE: The top ten states with the worst licensure requirements

Related: Bottleneckers in Hawaii: How licensing laws make it harder to get a job 

(NOTE: The Institute for Justice 'Bottleneckers' study finds Hawaii to be ‘most burdensome’ in USA due to the large number of professions requiring licensure.   In contrast, the Wisconsin study finds Hawaii to be the least burdensome based on an analysis of 10 specific professions and the requirements to attain license in each.)