Residents of New Mexico will soon be allowed to practice in some occupations without a state license, under an executive order signed by Gov. Susana Martinez.
The executive order lists some 34 state boards and commissions that, in addition to other departments, must accept as qualification the out-of-state licenses, military training, or work experience of job-seekers who move to New Mexico.
The order also directs officials to establish processes for “consumer choice,” an alternative to licensing that allows unlicensed professionals to provide services with their customers’ written consent.
The order, signed in October, also reduces barriers to the employment of those with a criminal record by restricting the crimes state officials may consider in evaluating individual license applications to those that “pertain directly to the practice of the occupation or the applicant’s capacity to perform the duties of that occupation.”
State agencies must also “establish clear, concise, and easily understood” appeal procedures for denied license applications, the order states.
Easing Workforce Entry
People who move to New Mexico from other states, such as military families, will be allowed to transfer their licenses to New Mexico or substitute professional experience if they come from a state which does not license the occupation.
The order waives initial license and testing fees for lower-income New Mexicans who are eligible for benefits under the Supplemental Nutrition Assistance Program (popularly known as food stamps), Temporary Assistance to Needy Families, and Medicaid. It also waives fees for National Guard members and members of the Armed Forces who require an occupational license to carry out their official duties.
In addition, the order reduces fees for occupational licenses to 75 percent of the national average and expands the acceptance of online continuing education credits.
Leading the Pack
Martinez has set the standard for states across the nation as well as the New Mexico legislature in terms of how to reform occupational licensing laws, says Paul Gessing, president of the Rio Grande Foundation, a New Mexico think tank.
“New Mexico has consistently been among the most heavily burdened states when it comes to licensing laws, according to the Institute for Justice,” said Gessing. The Institute for Justice (IJ) is a national public interest law firm that has challenged state occupational licensing requirements.
“Martinez’ executive order represented a major step in the right direction, and the Rio Grande Foundation will be working in the 2019 legislature to ensure the reforms are implemented successfully,” Gessing said.
Imposing Heavy Costs
Occupational licensing is the most burdensome way to regulate work, says Lee McGrath, a senior legislative counsel and managing attorney for the Institute for Justice’s Minnesota office.
A new study from IJ reports licensing imposes heavy costs on state and national economies. By shutting out some aspirants, licensing barriers may cost the national economy more than 1.8 million jobs, the report estimates.
Nationwide, an estimated 19 percent of all jobs require some form of occupational licensing. In New Mexico, 18.25 percent of jobs require state licenses.
Licensing barriers cost the U.S. economy $6.2 billion in lost output and $183.9 billion in misallocated resources each year, the IJ report states. Occupational licensing costs New Mexico’s economy $87.7 million in lost output and $1.7 billion in misallocated resources each year, resulting in the loss of more than 16,000 jobs, the IJ report states.
Weighing the Costs
The economic cost of occupational licensing results from reduced competition, McGrath says.
“Occupational licenses restrict competition, effectively giving licensed workers a monopoly, allowing them to command higher economic returns for their services than they could absent licensing,” said McGrath.
“As a result, policymakers should carefully weigh the human and economic costs of occupational licenses and impose them only when necessary to address present, significant, and substantiated harms that cannot be mitigated by less burdensome alternatives.”
Kenneth Artz ([email protected]) writes from Dallas, Texas.
Morris M. Kleiner and Evgeny S. Vorotnikov, “At What Co$t? State and National Estimates of the Economic Costs of Occupational Licensing,” Institute for Justice, November 13, 2018: https://heartland.org/wp-content/uploads/documents/InstituteforJusticeAtWhatCostLicensing.pdf