Going Further to Reform Occupational Licensing

What should states do to advance worker freedom?

My last blog post discussed a recent Federal Trade Commission report that outlined some steps that states could take to reduce the burden that occupational licensing laws place on workers. That report mainly dealt with license portability, or making it easier for licensees to find work across state lines.

Adam Thierer of the Mercatus Center at George Mason University lauds the FTC report but points out that it does not address these major problems of occupational licensing. He recommends that state policymakers not only adopt the FTC’s recommendations but go further:

Reform-minded state legislators could accomplish this by proposing reforms that protect the “right to earn a living.” Brink Lindsey of the Niskanen Center advocates the passage of state-level legislation establishing a right to engage in any lawful occupation unless: (1) “The government can demonstrate a compelling interest in protecting public health and safety,” and (2) “Occupational licensing is the least-restrictive means of advancing that compelling interest.”

The American Legislative Exchange Council has formulated model legislation that would help states enshrine that principle into law. The “Right to Earn a Living Act” would require that, “All occupational regulations shall be limited to those demonstrably necessary and carefully tailored to fulfill legitimate public health, safety, or welfare objectives.” Importantly, the model bill would also require that, “Within one year following enactment, every agency shall conduct a comprehensive review of all occupational regulations and occupational licenses within their jurisdictions” with an eye toward repealing or reforming licensing regulations that fail to meet those objectives. In 2017, Arizona became the first state to adopt legislation based on this model law.

This should sound familiar to some readers of TAP. We’ve written quite a lot about the need to reform Arkansas’s occupational licensing laws. We’ve also highlighted legislation that Rep. Richard Womack introduced in 2017 that would have made some much-needed changes to the state’s licensure system. Unfortunately, that bill failed to advance out of committee. In addition, AAI published a paper two years ago that summed up the evidence on how these licensing laws hurt the state and what legislators should do to reform them.

The need to reform unneeded and burdensome state licensing laws is something where there is growing agreement across the political spectrum. Unfortunately, as the situation with Rep. Womack’s bill illustrates, it is difficult to advance legislation to implement these reforms. Special interest groups have a big stake in preserving licensing laws that benefit them. They have a big incentive to be heavily involved in any legislative process to reform licensing laws. That is why reform efforts are so difficult not only in Arkansas but in states around the nation.

Special interest groups will continue lobbying to preserve their government-granted privileges. The evidence that these privileges are bad for the public continues to accumulate, however. Let’s hope that lawmakers pay attention to this evidence during next year’s legislative session.

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