Two Major Reports Released Today on Gov’t
& Work
IJ Study
on Occupational Licensing in 50 States & D.C. Asks, “Should You Need the
Government’s Permission to Work?”
Kauffman
Foundation/Thumbtack.com Survey Finds Licensing Requirements Nearly Twice as
Important as Taxes To Small Businesses That Rate Friendliness of Government
Policies
FOR
IMMEDIATE RELEASE: May 8,
2012
Arlington,
Va.—Two independently produced
reports released today by two of the nation’s leading advocates for
entrepreneurs shine a spotlight on the intersection of government and work among
lower-income workers and entrepreneurs. Taken together, the reports—released by
the Institute for Justice as well as the Ewing Marion Kauffman Foundation
together with Thumbtack.com—raise important
questions for lawmakers nationwide on government reforms that could create
private-sector economic growth and opportunity.
Institute
for Justice Report
As a new report issued today by the Institute for Justice discusses, more and more Americans now need the government’s permission before they can pursue the occupation of their choice. The IJ report, “License to Work: A National Study of Burdens from Occupational Licensing,” shows that for lower-income Americans, these government-imposed “occupational licensing” hurdles are not only widespread, but often unreasonably high. License to Work details licensing requirements for 102 low- and moderate-income occupations in all 50 states and D.C. It is the first national study of licensing to focus on lower-income occupations and to measure the burdens licensing imposes on aspiring workers.
As a new report issued today by the Institute for Justice discusses, more and more Americans now need the government’s permission before they can pursue the occupation of their choice. The IJ report, “License to Work: A National Study of Burdens from Occupational Licensing,” shows that for lower-income Americans, these government-imposed “occupational licensing” hurdles are not only widespread, but often unreasonably high. License to Work details licensing requirements for 102 low- and moderate-income occupations in all 50 states and D.C. It is the first national study of licensing to focus on lower-income occupations and to measure the burdens licensing imposes on aspiring workers.
For full
state and occupational rankings, and to easily compare licensing requirements
across states and occupations, visit the interactive version of
License to
Work at www.ij.org/LicenseToWork.
All of the 102
occupations studied in License to Work are licensed in at
least one state. On average, these government-mandated licenses force aspiring
workers to spend nine months in education or training, pass one exam and pay
more than $200 in fees. One third of the licenses take more than one year to
earn. At least one exam is required for 79 of the occupations.
“These licensing
laws force people to spend a lot of time and effort earning a license instead of
earning a living,” said Dr. Dick Carpenter, director of strategic research at
the Institute for Justice and report co-author. “They make it harder for people
to find jobs and to build new businesses that create jobs.”
Data show that
those practicing the 102 occupations studied are not only more likely to be
low-income, but also to be minority and to have less education, likely making
licensing hurdles even harder to overcome. In addition, about half the 102
occupations offer the possibility of entrepreneurship, suggesting these laws
affect both job attainment and creation.
How States
Rank
License to
Work finds that Louisiana licenses 71
of the 102 occupations, more than any other state, followed by Arizona (64),
California (62) and Oregon (59). Wyoming, with a mere 24, licenses the fewest,
followed by Vermont and Kentucky, each at 27. Hawaii has the most burdensome
average requirements for the occupations it licenses, while Pennsylvania’s
average requirements are the lightest.
Arizona leads the
nation with the worst combination of number of licenses and burdensome
requirements to secure those licenses, followed by California, Oregon, Nevada,
Arkansas, Hawaii, Florida and Louisiana. In those eight states it takes on
average a year-and-a-half of training, an exam and more than $300 to get a
license, a tremendous burden for would-be entrepreneurs and
workers.
Are All
These Licenses Necessary?
Noted licensure
expert Morris Kleiner found that in the 1950s, only one in 20 U.S. workers
needed government permission to pursue their chosen occupation. Today, it is
closer to one in three. Yet research to date provides little evidence that
licensing protects public health and safety or improves products and services.
Instead, it increases consumer costs and reduces opportunities for
workers.
License to
Work provides additional reasons to
doubt that many licensing regimes are needed. First, most of the 102
occupations are practiced somewhere without government permission and apparently
without widespread harm: Only 15 are licensed in 40 states or more, and on
average, the 102 occupations are licensed in just 22 states—fewer than half.
This includes a number of occupations with no self-evident rationale for
licensure, such as shampooer, florist, home entertainment installer and funeral
attendant.
Second, licensure
burdens often vary considerably across states, calling into question the need
for severe burdens. For instance, although 10 states require four months or
more of training for manicurists, Alaska demands only about three days and Iowa
about nine days. Such disparities are prevalent throughout the occupations
studied.
Finally, the
difficulty of entering an occupation often has little to do with the health or
safety risk it poses. Of the 102 occupations studied, the most difficult to
enter is interior designer, a harmless occupation licensed in only three states
and D.C. By contrast, EMTs hold lives in their hands, yet 66 other occupations
face greater average licensure burdens, including barbers and cosmetologists,
manicurists and a host of contractor designations. States consider an average
of 33 days of training and two exams enough preparation for EMTs, but demand 10
times the training—372 days, on average—for cosmetologists.
“The data cast
serious doubt on the need for such high barriers, or any barriers, to many
occupations,” said Lisa Knepper, IJ director of strategic research and report
co-author. “Unnecessary and needlessly high licensing hurdles don’t protect
public health and safety—they protect those who already have licenses from
competition, keeping newcomers out and prices high.”
Recommendations for Reform
Policymakers
should ensure that licensing burdens are truly necessary to protect public
health and safety—and eliminate or reduce those that are not. To identify
licenses to reform or eliminate, policymakers can use the interactive version of
License to Work and start with a few simple
questions:
· Is an
occupation unlicensed in other states?
· Are the
licensure burdens for an occupation high compared to other
states?
· Are the
licensure burdens for an occupation high compared to other occupations with
greater safety risks?
Carpenter
concluded, “Finding a job or creating new jobs should not require a permission
slip from the government. As millions of Americans struggle to find productive
work, one of the quickest ways legislators can help is to simply get out of the
way: reduce or remove needless licensure burdens.”
Kauffman
Foundation/Thumbtack.com Survey
Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, released new data today in their Thumbtack.com Small Business Survey, which asked small businesses nationwide about the business-friendliness of their state and local governments.
Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, released new data today in their Thumbtack.com Small Business Survey, which asked small businesses nationwide about the business-friendliness of their state and local governments.
Among other
things, the survey asked how small businesses view various types of regulations,
such as health and safety regulations, tax codes, zoning and licensing. Results
show that small businesses care almost twice as much about licensing regulations
as they do about tax rates when rating the business friendliness of their state
or local government. Moreover, among those small businesses subject to special
regulatory requirements—such as occupational licenses—the ease of compliance
with these regulations was by far the best predictor of their view of the small
business friendliness of their respective states.
The full
Thumbtack.com results, including state and city rankings, can be found at www.thumbtack.com/survey.
“The
Kauffman/Thumbtack.com survey results underscore just how important the issue of
licensing is to small businesses,” said Institute for Justice President and
General Counsel Chip Mellor. “The fact that both of our institutions created
and released these reports on the same day with no prearranged coordination,
demonstrates the importance of the issue of government regulations and how they
impact job opportunities for lower-income Americans and
entrepreneurs.”
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