Missouri's flagship institution hasn't had the greatest football team in recent years, but their legislators have just scored a touchdown.
Gov. Mike Parson of Missouri signed into law House Bill 2046 in July, which makes it easier for licensed professionals from other states, such as Arkansas, to work in Missouri. The bill's sponsor, Rep. Derek Grier, called it "a way for us to fill the work force needs that we have in our state today without costing a dime."
Good for Missouri. Now let's follow its lead.
The bill, known as universal recognition, allows professionals licensed in other states to quickly get a license in Missouri. Boards can still require background checks and a nominal fee, but for the most part, Missouri will trust other states' licenses with education and experience.
This bill is especially helpful during a pandemic and recovery. Missouri is allowing licensed professionals from other states to immediately find jobs there. For instance, this bill would allow a salon owner in Missouri to easily employ cosmetologists from other states who lost their jobs during the pandemic, without those workers taking on additional licensing requirements. Similarly, an animal hospital can more easily hire veterinarian technicians from other states without those techs taking extra Missouri-specific exams. Missourians are set to benefit from their legislators' actions. Arkansans should copy that page from their playbook.
The Institute for Justice, a nonprofit law firm that promotes liberty, ranked Arkansas as the third-worst state in regards to the combination of regulation severity and the number of licensed occupations for lower-income occupations. Their 2017 License to Work II study on 102 lower-income occupations ranked Missouri as the 43rd-worst state. That is 40 spots better than Arkansas. Occupational licenses often require paying fees, along with minimum education and work experience before someone can practice the trade. Their report also found that an Arkansan must spend, on average, 642 days to get licensed. A Missourian only has to spend 348 days. We also license nearly double the number of occupations compared to Missouri. What do we have to show for all of those additional regulations? Nothing good.
We have no evidence that suggests that our opticians are better quality in Arkansas than Missouri, even though we require three years of experience compared to zero years for the Missourian optician. We have no evidence that suggests our haircuts are better in Arkansas than in Missouri, even though we require 50 percent more experience and double the fee for a barber. Do we have any evidence that our fire alarm installers are better, even though we require substantial fees, two to five years of experience, and exams, compared to no license requirement in Missouri? No. In fact, Arkansas has a higher fire death rate than Missouri, and we rank as the third-highest risk of fire death in the U.S.
Our barriers are much higher than Missouri's, and they are increasing that gap with their sensible reforms.
As economists, we know that people respond to incentives. Research from Drs. Morris Kleiner and Janna Johnson show that licensing often discourages worker movement. In their paper "Is Occupational Licensing a Barrier to Interstate Migration?", they found higher licensing regulations, such as those in Arkansas, are associated with fewer workers moving in from out of state. This was especially true for occupations that don't have an easy way of accepting licenses across states.
A study by Dr. Alicia Plemmons, "Occupational Licensing Effects on Firm Entry and Employment," discovered that businesses are more likely to locate in the state whose licenses require fewer days of training. It makes sense. You're less likely to move to Arkansas if you're required to get additional testing and training before starting work. Missouri's new law addresses this problem by allowing licensed practitioners from other states to work right away without additional requirements.
Not only do lower licensing burdens increase jobs, they reduce poverty and crime. A policy paper by Dr. Thomas Snyder published by the Arkansas Center for Research in Economics, "The Effects of Arkansas' Occupational Licensure Regulations," shows that if Arkansas reduced its amount of lower-income licensed occupations to the level of Missouri, the poverty rate could decrease by 2.1 percent. The evidence on state licensing suggests that high regulations don't help us, but they do hurt us.
Six states, including Missouri, have now enacted universal recognition legislation, improving the process of recognizing out-of-state licenses. Arkansas has not. Yet we license more occupations and require more training than Missouri. Our legislators could make us more competitive and help us recover from the pandemic by recognizing licenses for those who want to move to Arkansas. The best evidence tells us that this legislation would be a win for Arkansans, and we could use a victory.
Alex Kanode is a policy analyst for the Arkansas Center for Research in Economics at the University of Central Arkansas. Dr. Thomas Snyder is associate professor of economics and a department chair at UCA. The views expressed are the authors' and do not necessarily reflect the views of UCA, nor are they endorsed by UCA.