Opinion: Michigan needs occupational licensing reform

With the nation facing a new recession and growing permanent layoffs, creating new careers is critical. The current economic downturn will hit people with criminal records especially hard. In 2018, a staggering 27% of people who had been imprisoned were unemployed, a number that’s surely risen since. 

But without a steady paycheck from earning an honest living, the risk of recidivism soars. Today, one of the biggest barriers to economic opportunity in Michigan is occupational licensing, which now affects nearly one-fifth of the state’s workforce. By comparison, during the 1950s, roughly 5% of American workers were licensed.

This growth in licensing, coupled with the fact that roughly one in three American adults have a criminal record of some sort, means that licensing boards have become a major gatekeeper to ex-offenders seeking a fresh start. Fortunately, the Michigan Legislature is currently considering a slate of bills that would make it easier for people with criminal records to obtain a license to work. 

According to my new report for the Institute for Justice, Barred from Working, Michigan's current laws are only slightly above-average, earning a C. The state does ban licensing boards from using arrests and vacated records to disqualify applicants,while boards are required to consider evidence of rehabilitation. However, boards are free to block ex-offenders on the grounds that they lack “good moral character,” a broad term that gives boards wide discretion. 

But under HB 4488, boards could only deny a license to someone with a criminal record if they were convicted of a felony and if that felony would have a “direct and specific negative effect on his or her ability to perform” and if granting the license would increase the chances that the applicant would reoffend. With this more stringent standard, licensing boards may disqualify only those who would truly pose a threat to public safety if licensed.

Yet even if these reforms are enacted, ex-offenders would still have to comply with many burdensome licensing requirements. On average, the Institute for Justice found that a license for lower-income occupations required Michiganders to complete 255 days of training and experience, pay $242 in fees, and pass two exams. Thanks to that thicket of red tape, onerous occupational licensing costs Michigan almost $8 billion and results in nearly 80,000 fewer jobs, according to a separate study from the Institute for Justice.

Each year, around 12,000 people leave prison in Michigan. The pending reform bills would eliminate many unjust barriers to re-entry and help ensure that ex-offenders aren’t locked out of their chosen careers.

Nick Sibilla is a legislative analyst at the Institute for Justice and the author of the study "Barred from Working."