By Al Downs
Congressmen from both sides of the aisle echoed state lawmakers' skepticism about the effects of excessive occupational licensing during a recent hearing of the U.S. House of Representatives.
In his opening statement, Chairman Dave Brat (R-Va.) clarified the committee’s interest in occupational licensing by suggesting that this form of regulation “may increase prices for consumers, increase job vacancies and hurt small businesses.”
This sentiment was echoed by ranking member Representative Dwight Evans (D-Pa.), who said that while licensing can be a valuable tool for protecting the public when “[t]he harm done by an unskilled person working in one of those professions is serious ... they are also a barrier for entrepreneurs to enter an occupation—especially low-income and immigrant workers.”
The hearing, “Occupational Hazards: How Excessive Licensing Hurts Small Business,” was conducted by the Small Business Subcommittee on Economic Growth, Tax and Capital Access.
Most of the recent discussion among lawmakers, regulators and policy researchers on the topic of occupational licensing has taken as given that these laws are solely within the jurisdiction of state governments.
However, since the 2015 Supreme Court decision in North Carolina Board of Dental Examiners v. Federal Trade Commission, in which the majority ruled that licensing boards comprised of active industry professional are subject to federal antitrust laws and may be penalized for engaging in anti-competitive behavior, occupational licensing has increasingly drawn the attention of federal legislators and executive branch officials.
The bipartisan agreement expressed in the hearing reflects what has been going on in states for years.
In 2012, the governor’s office in Michigan issued recommendations for licensing policy changes resulting in eight bills being signed into law.
In 2016, legislation to address the unintended negative consequences of occupational licensing on employment was introduced in Illinois by Democrat State Representative Marcus C. Evans, while Republican State Representative Martin Daniel proposed licensing reforms in Tennessee with similar aims. Each of these bills became law with bipartisan support. In 2017, Oklahoma created a task force to conduct a comprehensive review of its licensing laws, which reported recommendations early this year.
This year alone, state lawmakers in Colorado, Idaho and Arizona have begun advancing legislation to reduce licensing burdens, while similar reforms in Nebraska have recently become law. Bipartisan efforts to review the effect of state licensing also have been undertaken in 2018 in Virginia and Arkansas, with New York expected to follow suit.
Representing the D.C.-based, pro-free-market R Street Institute, Jarrett Dieterle testified in the recent congressional hearing that “[w]hile it is true that the bulk of licensing takes place at the sub-national level, the federal government is far from powerless to help,” going on to call for passage of federal legislation and expanded involvement of the Federal Trade Commission in state licensing laws.
States engaged in occupational licensing policy are being helped by a U.S. Department of Labor grant that funds the 11-state Occupational Licensing Learning Consortium as well as technical assistance on the subject for all states from NCSL. However, expanding federal reach to rewrite state licensing laws would be a step far beyond this.
The authority to determine licensing laws falls to state governments as no two states will be identical when it comes to labor markets or regulatory goals. As demonstrated in this congressional subcommittee hearing, federal lawmakers share the concerns over licensing with many state lawmakers.
Albert Downs is a policy specialist in NCSL's Employment, Labor and Retirement program.