A group of Wisconsin state lawmakers is proposing to reform the state’s laws on occupational licensing when they return to work in 2017.
In November 2016, the Republican caucus of the Wisconsin State Assembly released its “Forward Agenda,” a document laying out the party caucus’ objectives for the 2017 legislative session. Occupational licensing reform was listed as one of the top legislative priorities, among other issues, such as tax and education reforms.
Government Permission Slips
Collin Roth, a research fellow at the Wisconsin Institute for Law & Liberty, says occupational licensing laws make it more difficult for people to find employment.
“Occupational licensing, by its very nature, creates barriers to entry,” Roth said. “For any individual who seeks employment in certain licensed professions, they are obligated by law to jump through government-mandated hoops to earn a permission slip from the state.”
Roth says occupational licensing laws harm low-income earners more than other groups.
“Cosmetologists and barbers, often in poor communities, are fined hundreds of dollars by the Wisconsin Department of Safety and Professional Services for providing haircuts or applying makeup without a license or with an expired license.”
Economic Ripple Effects
Edward Timmons, an associate professor of economics at St. Francis University, says occupational licensing harms consumers by unnecessarily increasing the cost of services.
“Occupational licensing affects approximately 25 percent of the U.S. labor force,” Timmons said. “Research indicates that licensing increases the earnings of professionals by as much as 15 percent, and this leads to consumers paying between 3 percent and 15 percent higher prices for services. By erecting barriers to entry, occupational licensing also makes it harder for individuals to begin working in a licensed profession.”
Timmons says occupational licensing may increase unemployment and underemployment.
“People very well might be dropping out of the labor force entirely and becoming discouraged because they don’t think there are opportunities out there for them,” Timmons said. “Because licensing effectively makes it harder for them to become a barber or a massage therapist or to work in a wide array of occupations, many individuals might be entirely discouraged from entering the job market.”