Job creation should be at the top of the to-do list for every policymaker in Arkansas. There's a simple way we can help Arkansans find more work: Remove government barriers to employment. That means reforming our state's over-extensive occupational licensing laws.
Sixty years ago, only 5 percent of the U.S. labor force had to have a government license. Today, 25 percent of American workers must have government permission to work. The evidence shows that over-extensive occupational licensure often hurts the economy--damaging both consumers (who have to pay higher prices) and workers (who are prevented from obtaining a job in a licensed field).
Mounting evidence from the left and the right shows the harm from over-extensive licensing. A recent Heritage Foundation study concluded that occupational licensure costs every American household $1,033--a total national impact of $1.27 billion. The author found that every family in Arkansas pays an added cost of $754 annually--just because of licensing. Such laws also hurt the ability of people who move across state lines to find work, hamper people who want to change careers, and deprive first-time job-seekers of opportunities to become employed.
The problems caused by occupational licensing are especially prominent in Arkansas. Our state was ranked the fifth "most extensively and onerously licensed state" in the union in a recent survey by the Institute for Justice. Arkansas imposes far more burdensome requirements on contractors in skilled trades than most other states. Typically, contractors covered by our state's licensing laws must work under someone else for five years before they are allowed to strike out on their own. Why, it's almost as if such restrictions have nothing to do with benefiting consumers, but instead are intended to protect incumbent businesses from competition! Regrettably, Arkansas' restrictions in this area are some of the most oppressive in the nation.
Some licensed occupations here are mostly unlicensed in other states--such as funeral attendants, makeup artists, and plant-nursery workers. And in a variety of occupations, Arkansas ranks near the top in the length of vocational experience imposed by state government. For instance, to obtain a professional license in Arkansas, on average one needs more than twice as much education and experience as in Texas. But there is no evidence that consumers are better served here than in states with more relaxed licensing laws.
Arkansas is an outlier among state-licensing regimes--our state imposes far heavier requirements on occupations than most other states do. In general, other states require exams--not experience--to obtain licensing or certification. Requiring testing is a superior regulatory alternative, because it does not force those who want to work to sit for months or years in classrooms as a first step. Arkansas lawmakers who want to ensure that consumers are treated fairly should move the state toward occupational testing, and away from our current time-intensive licensing requirements.
To make sure that our regulatory system is focused on consumer welfare, the General Assembly should also enact regulatory-review legislation. Such legislation would involve the creation of a supervisory office in the executive branch that would oversee occupational boards--that way, we can be sure that they use the least restrictive regulations necessary to protect public safety and health.
Legislators should also abolish a wide variety of licenses, enact exemptions to occupational practice acts, and move from licensing to certification in occupations where that approach makes more sense. The state should also enact legislation that licensing boards must be actively supervised by democratically accountable state officials. That supervision should include publicly accountable approval, before implementation, of every rule, policy, and enforcement action.
While licensure may seem like a good way to protect the public, in practice it does not always achieve that end. Many occupations--like, say, auto mechanics--are unlicensed; every day, the work of these professionals is central to the public's safety and welfare. The best and most efficient regulation often is based on consumer choice, provider reputations, and less restrictive forms of regulation, such as private certification and government inspection. Enacting these kinds of best regulatory practices will give more Arkansans the opportunity to pursue happiness through exercising the right to do honest work.
Dan Greenberg, a lawyer and former state legislator, is president of the Advance Arkansas Institute.
Editorial on 12/12/2016