Remove workforce barriers through licensing reform

The Detroit News

As Michigan continues to rebuild its economy, it should embrace every tool at its disposal to spur growth, job creation and worker retention. That includes lifting onerous occupational licensing burdens that disproportionately affect lower income professionals.

Occupational licensing requirements have exploded, in Michigan and across the country. A recent White House report finds the share of workers licensed at the state level has risen five-fold since the 1950s. More than one-quarter of U.S. workers now require a license to do their job.

Michigan falls roughly in the middle of all states in terms of how broadly and heavily it licenses, according to a 2012 report from the Institute of Justice, “License to Work.”

Michigan licenses 42 of the 102 low- and middle-income occupations studied in that report, and of the licensed occupations, 15 are licensed in fewer than half of the other states. That makes these professions — such as painting, carpentry, hair styling, taxi driving and chauffeuring and even animal control — particularly ripe for reform.

Removing these unnecessary licensing requirements would promote individual entrepreneurship and spur entry into the job market. That’s critical for cities like Detroit and Flint, with high unemployment but limited available jobs.

Occupational licensing costs low-income entrepreneurs hundreds of dollars in fees and hundreds to thousands of hours of required education, a huge challenge for low-skill workers also facing other economic barriers.

One of the concerns from those who advocate for heavy occupational licensing is that the state should protect the public from unqualified practitioners who might endanger health and safety.

But there’s actually evidence that compulsory licensing has the opposite effect. Because prices are inflated for the “legitimate workforce,” consumers find workarounds to services they need, often performing them themselves with little knowledge of what they’re doing. Because licensing requirements are so numerous, many cities like Detroit also often simply lack the resources to properly enforce them.

Gov. Rick Snyder created an Office of Regulatory Reinvention in 2011 to eliminate regulatory requirements that restrict job access and growth. Some progress has been made, with about eight professions cutting down licensing requirements and other barriers. But much remains to be done.

The state should create a process to efficiently and effectively review the more than 100 statutes that govern various licenses. Reforming the culture will require leadership from the Legislature and further support from the governor.

A state that is still trying to restore its pre-recession job base should not tolerate unnecessary barriers to work. Some professions absolutely need licensing to protect the public, but many others don’t.

Bringing rationality to the regulatory process can grow the state’s economy and improve quality of life for its residents.