Editorial: Roll back needless licensing rules
Occupational licensing laws in Michigan reduce jobs, hurt low-income workers, increase crime, inflate consumer prices and waste millions of state dollars, new data shows. And Detroit, where jobs are the most precious, is harmed the most. State and local governments should make it a priority to roll back these unhelpful regulations.
In Michigan, 164 occupations require a license, including painters, manicurists, librarians, landscapers, gutter installers, auto mechanics, barbers, hearing aid dealers — even hair braiders.
These licenses are most often obtained by a combination of fees, classes, training and exams. For example, a hair braider in Michigan pays $154, needs 500 hours of experience and must pass an exam to be licensed to legally braid hair.
Licensing means safety for consumers, right? Policy analyst Jarrett Skorup’s report published this month at the Mackinac Center for Public Policy shows “there’s just no evidence” occupational licenses increase health and safety in the vast majority of fields.
For example, data shows that half the states don’t license electricians and there’s no difference in safety.
“We are not safer because Michigan licenses electricians,” Skorup says. “We aren’t safer because we require barbers do more training than some commercial airline pilots.”
Unlike many states, Michigan barbers must pass an exam, pay $241 and show 1,800 training hours to be legally licensed. It’s just one of many occupations the state directly manages and enforces under a $153 million annual budget, including $24 million straight from the general fund.
It’s not just taxes affected. Licensing costs raises the price of goods and services – in Michigan, consumers spend $2,700 more annually as a result, including 30 percent more on haircuts, the report says.
Licensing also restricts 125,480 potential jobs, according to Skorup’s data, as costly requirements overwhelm especially low-income people. Michiganians with any criminal record — even sometimes just a civil infraction — can be discriminated against and refused licensure.
So who benefits? Industry insiders. They champion licensure to stifle competition, increase demand within Michigan and raise income per license-holder. Most licensing boards comprise current license-holders.
License laws have expanded 500 percent since 1950. And not by evidence-based, systematic prudence — fewer than 30 occupations require a license in all 50 states.
Gov. Rick Snyder is leading the roll-back cause. The state has abolished licensure for seven occupations. That’s as many reforms as the other 49 states combined.
Detroit is the stark exception. It requires its own licensing for 60 occupations. About half are already licensed by the state, so Detroiters must pay extra fees and jump extra hoops. The other half are unique — including auctioneers and window washers — and require a license only in Detroit.
Plumbing, for example, requires state and city licensing hoops. Few go to the trouble: there are only 58 licensed plumbers in the city. “There are fewer plumbers in Detroit than there are in the city of Midland,” Skorup says.
Detroit should quit punishing itself and spark jobs through licensure reform. De-regulating hair braiders should be an easy first step in Lansing.