In May 2017, Gov. Asa Hutchinson called on legislators to find ways to reduce red tape and regulations that burden Arkansas' entrepreneurs and business leaders. As a result, this session legislators proposed over 80 bills, and over half of those became law.
Occupational licensing is when individuals are legally barred from working in certain occupations without a government-issued license. Proponents often intend to ensure quality and safety for consumers, but their good intentions frequently fail. Occupational licensing often increases prices, reduces competition, and doesn't improve quality or safety.
Some reforms were about specific licenses. For instance, Act 286 delicensed horse massage so that people other than veterinarians can massage Arkansans' horses. But two of the legal changes impact every licensed occupation in Arkansas. One reforms licensing laws as part of the state's criminal-justice reform efforts. The other provides for regular reviews of individual licenses.
Many licenses require that applicants pass a criminal background check. Crimes that were committed many years ago and were completely unrelated to the licensed occupation can be used to deny licenses and keep people out of work. An ACRE policy brief, "Second Chances: The Importance of Occupational Licensing Reform to Arkansas' Criminal Justice Reform Initiatives," co-written by UCA Associate Professor Thomas Snyder and Stephen Slivinski, senior research fellow at the Center for the Study of Economic Liberty at Arizona State University, found that stringent criminal background restrictions increase the rate at which ex-offenders re-offend. Act 990 will help applicants with criminal backgrounds by restricting any board from disqualifying an individual because of a criminal conviction. With this act, licensing boards cannot consider crimes five years after incarceration or probation (whichever is later), as long as it's not a violent or sexual offense.
Act 990 also allows people to submit a request for licensing boards to evaluate their criminal background and determine whether or not they would deny the license. This can be done before a person goes to school to work in the field, ensuring they won't spend time and money preparing for an occupation only to have the license denied later because of their background. That way someone who was caught with a fake ID knows beforehand if they would be denied an accounting license for that offense.
The other big reform was the Red Tape Reduction Sunrise and Sunset Act of 2019. This act gives Arkansans a pathway to future reform by creating sunset reviews. These are reviews of each individual license on a regular basis. Every year, the Arkansas Legislative Council will examine one-sixth of all licenses on a rotating basis and check whether there are less burdensome alternative regulations than licensing that will still protect Arkansans. If the license is necessary, the council will provide recommendations to streamline or improve application processes or reduce the burden of licensing requirements.
The improvements made by sunset reviews would help people wanting to work in the licensed fields, but it would also help consumers across Arkansas. In ACRE Report "The Effects of Arkansas' Occupational Licensure Regulations," Snyder found that reducing Arkansas education and experience requirements to that of Mississippi would decrease prices across the board in Arkansas by 4.5 percent.
How do sunset reviews get us there? These reviews are beneficial because they allow targeted changes for specific licenses. The best policy for barbers would not work as well for doctors. Regular reviews mean legislators will continuously examine requirements as circumstances change.
The taxi industry is a great example. In the 1990s, strict licensing of the taxi industry made more sense. Initially, consumers were unable to see the reputations of taxi drivers and determine whose car it was safer to get into. However, with services like Uber and Lyft, anyone can see reviews and determine the quality of drivers instantly. Outdated laws requiring taxi medallions and licensing are changing. Regular review allows for more innovation and ensures that nobody abuses the system.
Governor Hutchinson has called this past session one of the greatest of all time. That especially applies to licensing, with two changes that will impact every licensed occupation.
The criminal-justice reforms gave more Arkansans the opportunity to turn their lives around and find work in licensed occupations. Sunset reviews gave legislators a tool to further implement reforms for individual licenses that are specifically tailored to that license.
However, we still have more to improve. Legislators should use sunset reviews to offer recommendations for legislation and continue improving the lives of Arkansans. By implementing those recommendations and continuing to adapt, Arkansas could become a leader in occupational licensing reform.
Alex Kanode is a policy analyst with the Arkansas Center for Research in Economics (ACRE) at the University of Central Arkansas. He co-wrote The Costs of Occupational Licensing in Alabama, published by the Alabama Policy Institute. The views expressed are the author's and do not necessarily reflect those of UCA.
Editorial on 05/25/2019