Lawmakers and the governor have many different ideas and opinions when it comes to the state budget, including education spending, labor rules and COVID-related policies. But there’s been one important area of agreement between Republicans and Democrats, the business community and the ACLU, the Trump administration and the Obama and Biden administrations, and employers and consumers: occupational licensing reform.
Under licensing, people must meet certain requirements put in place by the government before they can work legally. The need to comply with various requirements, which include obtaining educational degrees, completing training and passing certification tests, costs time and money, making it more difficult for workers from low-income households to secure a job. The requirements also limit the number of workers in these licensed occupations, which means less competition and higher costs for consumers.
Some of these rules may be effective at protecting the public. But a lot of them are arbitrary and serve little purpose. Michigan licenses a lot of occupations few other states do, and we have many unnecessary mandates.
Five important reforms to licensing should be considered by all states. In Michigan, two have been enacted, but there are three others lawmakers should implement.
The state of Michigan licenses electricians, home builders, roofers and others. Should cities be allowed to add their own mandates on top of that? And should they be able to impose licensing requirements on an occupation when the state doesn’t do it? There are also many occupations the state doesn’t license, such as driving a snowplow or operating a batting cage. Should municipalities be allowed to impose extra costs on entering or staying in an occupation if state lawmakers don’t see them as necessary? If they could, this would create a patchwork of licensing requirements and would increase compliance costs for anyone who offers services across the state, raising costs and reducing supply of service providers for consumers. Michigan solved this issue in 2018 by forbidding local governments from passing their own licensing rules or going above and beyond what the state has in place.
Nearly one million jobs in Michigan require a license, and the vast majority of those licenses have “good moral character” provisions, which effectively block anyone with a criminal record of any kind from qualifying for a license. Still other licenses just flat out ban people with certain criminal convictions from working. Last year, lawmakers solved this issue by redefining “moral character” to ensure it blocks a license only for significant crimes or those directly related to the occupation in question. This gives more people the ability to work and more businesses the ability to hire them.
Ever ask someone from a military family where home is? You get a lot of interesting answers. Military families are transient — they move around and get restationed frequently — and they tend to be highly trained. That’s why lawmakers should pass a package of bills that would allow military members, veterans and their families to use their training hours and out-of-state licenses to fulfill licensing mandates in Michigan. This bill package was introduced last year with support from Gov. Gretchen Whitmer and a bipartisan group of lawmakers, and it has been reintroduced in 2021.
For years, there have been complaints about a lack of workers for some jobs. You’ve likely heard we have a teacher shortage, not enough road builders, and that we need more construction workers. Medical costs, meanwhile, are up from a lack of doctors, nurses and dentists. This is economics 101 — supply and demand. But a major restriction on the supply of medical professionals is the state’s licensing scheme, which affects other parts of the economy as well. It makes it more difficult for many workers from other states to move here and work in licensed industries. It’s time to learn from elsewhere. Some states have passed laws that officially recognize licenses earned in other states, so that people do not have jump through their states’ particular hoops to get a job. Michigan should follow suit.
There are about 150 licenses on Michigan’s books. Many of them exist in other states, but some are unique to Michigan. Many of the requirements are reasonable and ensure a basic level of proficiency for the licensed workers. But some requirements here involve training and costs way above and beyond what people face in other states. The way to determine what makes sense is for lawmakers to set up a review process in which an independent body looks at licensing rules and recommends changes for the Legislature to consider. This is being done in other states, and there is a model for how to analyze the rules to ensure the state is protecting public health and safety without needlessly restricting workers.
The number of occupations subject to licensing has grown significantly, often without any public benefit. This isn’t working. Michigan policymakers should build on our past reforms to do more.
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