Over the past several decades and often under the pretense of improving public health and safety, states like Michigan have added into law dozens of new occupational licensing requirements. Economic theory and recent empirical studies suggest, however, that most of these laws do not improve public health and safety, but instead create harms that can slow economic growth. Simply put, these laws make it more difficult for Michigan residents to deploy their skills, serve others, earn income and pay taxes. And because those who benefit from these restrictions on market competition tend to be higher in the income distribution, occupational licensing requirements also exacerbate income inequality.
In light of these facts, Michigan should take a different approach to occupational licensure. The state should thoroughly review all the current licenses on the books and eliminate those that cannot be shown to improve public health and safety. Policymakers should also establish a criteria for creating new licenses, so that new licenses must meet strict standards before they are written into law.
The economic research suggests that these types of reforms would have a positive effect on Michigan’s economy — creating jobs, boosting entrepreneurial opportunities, reducing prices and growing incomes. In the end, the economic damage and arbitrariness of occupational licensing laws can no longer be ignored. Gov. Snyder has been a consistently strong leader on this issue, and state lawmakers should consider making his recommendations a reality. Removing the needless barriers standing in the way of Michiganders pursuing their dreams and providing for their families is a necessary step to reinventing this state’s economic prospects.