Late last month, U.S. Labor Secretary Alexander Acosta challenged state legislators to abolish one of the most noxious barriers to work: occupational licensing. If Sacramento lawmakers followed through, hundreds of thousands of Californians would be liberated from a system that bars entry into the workforce and also protects those who’ve gained government consent from the competition that benefits consumers.
Speaking in Denver at the American Legislative Exchange Council’s annual meeting, Acosta told the group that “in 1950, only about one in 20 jobs required a license. Today, more than one in four Americans need a license to legally perform their work.”
“Excess licensing hinders the American workforce,” Acosta explained to an assemblage that surely already understands the harsh downside of licensing.
“First, the cost and complexity of licensing creates an economic barrier for Americans seeking a job, especially for those with fewer financial resources.
“Second, excessive licensing creates a barrier for Americans that move from state to state.
“Third, excessive licensing creates a barrier for Americans looking to leverage technology and to expand their job opportunities.”
Too often licensing is not only excessively burdensome, it is farcical. For instance, the Little Hoover Commission, an independent state oversight agency, tells us that in California manicurists “must complete at least 400 hours of education, which can cost thousands of dollars, and take a written and practical exam before becoming licensed.”
More than 250 jobs in California require those who hold them to obtain a government-issued permit to earn their livelihood, which works out to a little more than one in five jobs being licensed occupations, says the Little Hoover Commission. The ratio is worse in 29 states, so it seems California is not among the most egregious offenders.
But it is. According to the Institute for Justice, it is the seventh worst state in terms of the burden of its licensing requirements. Pacific Research Institute fellow Wayne Winegarden ranks the state 15th from the bottom in licensing burden. The Goldwater Institute said last year that judging by its methodology, only Arizona places a heavier overall burden on its workforce than California. And only two states license a higher percentage of low-income jobs, says the Little Hoover Commission. This is particularly important to note since California has the highest poverty rate in the country.
If Sacramento freed more Californians from the chains of occupational licensing, we’d all take a step forward. But there seems to be little enthusiasm for it. In the current session, Sen. John Moorlach, a Costa Mesa Republican, introduced Senate Bill 247 that, according to the Senate analysis, “repeals the requirements for an individual to obtain a license to perform the following activities: fitting or selling hearing aids, locksmithing, barbering or the application of makeup, disposing of cremated human remains, and performing custom upholstery services” and “modifies the regulation of certain landscapers, tree service contractors, and private investigators.”
The bill failed 6-2 in committee. Which indicates that rather than there being little enthusiasm for reform, there is outright hostility toward it. And that comes with a cost. University of Minnesota economist Morris Kleiner told the Little Hoover Commission in his 2016 testimony that “the cost of licensing nationally in the form of lost jobs” is 0.5 percent to 1 percent.
“Applying that lower number to California would result in a reduction in the unemployment rate in the state or a gain of approximately 39,000 jobs if licensing were reduced in the state relative to certification or other less restrictive forms of regulation,” he said. And, of course, using the higher figure would mean 78,000 more jobs.
The majority in Sacramento is fully capable of making a positive difference in California, but rejecting another reasonable effort at needed reform doesn’t inspire confidence it will ever do what’s right.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.