We're All Licensees Now

Should a person be prohibited from earning a living by operating a parking lot unless he or she has been licensed by the state? How about the handyman you hire to help build a new deck – should he be subject to fines and ultimately to imprisonment if he fails to get a license? Or the nurse who tests workers’ hearing at a free health fare sponsored by an employer – should she be required to get a special audioligist’s license, pay fees, pass mandatory education requirements, and jump through other state-mandated hoops?

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Most people would question whether the government should be the arbiter of legitimacy for each and every profession or task performed by those exercising their right to earn a living. Yet these proposed licensure schemes are among 17 that already have been introduced in the Michigan Legislature this year. They are only the latest in a series of proposals put forward in the last few sessions of the Legislature, aimed at licensing everything from athlete agents to tanning salons. Up to now, the reason these proposals did not advance is because Michigan’s last governor, John Engler, imposed an informal moratorium on licensure mandates for new occupations.

But under a policy recently announced by Gov. Jennifer Granholm, state licensure for a host of common occupations may be a step closer.

Granholm has convened a workgroup in the Department of Consumer and Industry Services to review Engler’s moratorium. This department contains the state licensing bureau. The mission of the group is to develop a consistent standard by which the governor would judge requests from special interest groups for licensure requirements.

Most people believe, understandably, that state licensing is about protecting the public by screening applicants, providing oversight, and transferring adjudication of civil disputes from the courts to a state agency. They imagine that state licensure of particular commercial activities is promoted by disinterested public interest groups, or lawmakers trying to look out for the interests of their constituents.

If only that were true. The dirty little secret about state licensure is that the people who lobby for it are usually the stronger competitors of those who would be licensed. Their goal is not to protect the public, but instead to raise barriers to new competitors who might cut prices and lower profits.

For example, in the case of the carpenters cited above, those pushing licensure are unions and unionized contractors, who want to shut down competition from "carpenter contractors." To sell the scheme, lawmakers wink and talk about protecting the public, sensing an opportunity to show they "care" and are "doing something."

The problem is, this misplaced "compassion" hurts real people. For example, the Institute for Justice, a public-interest law firm that represents individuals whose right to make a living has been taken away by licensure schemes, conducted a study in which they quantified the effect of licensing on Michigan’s child-care centers. They reported the following:

"There is an urgent need for child care . . . And there are many women eager to provide safe, loving care. However, child-center directors must take 60 semester hours of course work from an accredited college, and regulatory requirements imposed on physical facilities for child care virtually prohibit any child care in apartments. As a result, in Michigan it is estimated there are well over 15,000 child-care providers who operate without a license."

Michigan citizens should always be suspicious whenever a politician, bureaucrat, or trade group agitates for a new licensure mandate to practice what previously was a free economic activity. The watchword should always be a question: Who gains? Usually, it's not average Michigan citizens.

As mentioned, a moratorium of sorts has been in effect on new licensure schemes – with some major exceptions. Most notably, then-Gov. Engler approved one of the most absurd licensure schemes ever in 1997, on electrologists and hair braiders. This unfortunate lapse violated the standard Engler had set in an earlier veto message on a bill to license tanning salons, a standard that should be adopted today: "Government cannot and should not be involved in all potentially hazardous aspects of life. Individuals must be held accountable for their own actions."

The new governor’s licensure "work group" would do well to take this message to heart.

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Jack McHugh is a legislative analyst for the Mackinac Center for Public Policy. He manages MichiganVotes.org, a web-driven legislative database operated as a free public service of the Mackinac Center. He has written recently on Michigan death-tax legislation.