Bipartisan Effort to Reform Licensing Laws

President Obama, scholars call for rollback of rules

In his recent State of the Union address, President Obama at least called for one area in which governments should scale back their rules: licensing.

The president proposes funding for states to assess these regulations which put obstacles in the path of people trying to legally work, often in the form of fees and mandated education. According to a fact sheet from the White House, “The Budget seeks to reduce occupational licensing barriers that keep people from doing the jobs they have the skills to do by putting in place unnecessary training and high fees.”

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There is recent work showing that licensing laws across the nation cause higher costs for consumers, higher unemployment for workers, and significant harm to the economy.

A study released on Jan. 28 from the Brookings Institution says states should improve occupational practices by undertaking a cost-benefit analysis for additional licensing requirements, allow people who move across state lines to retain their ability to practice, and reclassify many occupations to require a certification or no regulation. The report says, “If federal, state, and local governments were to undertake these proposals, evidence suggests that employment in these regulated occupations would grow, consumer access to goods and services would expand, and prices would fall.”

On Jan. 30, a report from the Pew Charitable Trusts took a look at licensing laws across the nation. The article shows how special interest groups lobby to gain or maintain licensing laws in order to block out competition and raise prices.

“Brookings and Pew recognize that occupational licensing offers no [overall] benefits,” said Lee McGrath of the Institute for Justice, which authored its own study “License to Work” in 2012. “It adds no incremental value over the market at weeding out incompetence and fraud. Employers and consumers are better at demanding relevant training and skills than state legislators and captured licensing boards.”

Michigan should continue its good work of removing licensure rules, which do nothing for public health and safety and largely harm moderate-income workers from finding employment.

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