1) Provide the legal definition of the occupation, including the existing legal scope of practice, where appropriate.
Precision in knowing what work an occupation performs is important for understanding which occupational regulations are the most appropriate. The scope of practice is also important for comparing the regulations to those that exist in other states.
2) How many people are licensed in this occupation in Michigan and how has this changed over the years? Does the licensing law appear to be enforced?
A relatively low number of licensed individuals or a law in which the department rarely or never enforces the licensing requirement suggests that a less restrictive form of regulation might be more appropriate. If fewer people are getting new licenses, this may reflect decreasing consumer demand for the service or that the work has become obsolete. If this is the case, a re-evaluation of the potential risk to public safety may be in order. Most of this information can be found from the state licensing agency — the Michigan Department of Licensing and Regulatory Affairs, or LARA — and state and federal government survey statistics.
3) How many other states license this occupation? If possible, find data for state licensure of the occupation nationwide for the previous 10 years.
Both the nationwide extent of licensure and recent trends provide a quick check on the need for licensure. Sources for this data include national trade associations or occupational licensing studies undertaken over the previous decade. The website www.careeronestop.com, sponsored by the U.S. Department of Labor, Employment and Training Administration, compiled a database of about 1,000 different occupational licensing laws across the states.
4) Compare the licensing requirements to a sample of requirements from other states that also license the occupation.
This process should allow for an indication of how stringent the licensing requirements need to be. This is particularly helpful if the licensing requirements in question are at one extreme or the other. This information could be evidence of an unsubstantiated barrier to entry for an occupation or, the opposite, too lenient of entry requirements that makes the licensing requirement less effective.
5) Inquire of the state licensing board about the volume and type of health or safety complaints filed by consumers in relation to the occupation in question.
This data can be crucial in assisting policymakers who are trying to determine the potential need for a licensing law for the purpose of improving public health and safety. If there are very few consumer complaints, it could be an indication that the license is not needed and excessive. If there are a lot of serious complaints, it might mean that the licensing requirements are not working properly. In addition, this information will also be helpful in identifying the least restrictive form of regulation that should be used for an occupation.
6) Are there similar occupations that have significantly different licensing requirements?
Licensing laws tend to be created one at a time; it is rare for a state to create similar licensing requirements for a large group of similar occupations. For this reason, it is likely that there are occupations that are similar but have very different licensing requirements. The case for licensing an occupation is weakened if there’s similar occupations that appear to function well without a licensing requirement, especially if there’s no evidence that the unlicensed occupation threatens public health or safety. On the other hand, if there is a connection to public safety issues, this analysis may make the case for expanding licensing requirements to unlicensed occupations that are similar to licensed ones.
7) Is there a difference in liability insurance costs between unlicensed occupations and licensed ones?
The value of this analysis is based on the idea that the more dangerous an occupation is to the public the more liability insurance will cost. This comparison could be done one of two ways: by comparing the liability insurance costs of the licensed occupation to that of similar occupations that are unlicensed, or by comparing insurance costs in Michigan for the occupation to those in other states that do not license the same occupation. If there is no significant difference in how much liability insurance costs for the licensed occupation, it is evidence that the licensing itself is not making the public safer.
There are three main public interests that need to be considered when choosing a regulatory mechanism for an occupation: health, safety and welfare. It is important to remember that there may be more than one acceptable regulatory option, and that choosing the most appropriate one, or combination, can produce a positive outcome for all interest groups involved.
Analyzing an occupational licensing law by finding answers to these seven questions will go a long way to providing policymakers with a means to improve Michigan’s licensing system. In the end, the goal is to determine precisely where occupational licensing is needed, where it needs to be modified or swapped out for a more appropriate regulatory mechanism, and, of course, when these requirements amount to nothing more than needless barriers to entry that artificially limit supply, raise consumer prices and make it more costly for people to be gainfully employed in a trade of their choice.
Some of this analysis may seem like just gathering basic data about these occupations, but it is highly likely that this type of information was not considered by the policymakers who created these licensing requirements. Therefore, this information is needed to better inform lawmakers about the optimal type of regulatory mechanism to use for the occupations under review.