Research & Commentary: Lawmakers Can Improve Job Opportunities for Michigan’s Ex-Offenders by Reforming Occupational Licensing

Published June 4, 2019

Nearly one in three Americans needs an occupational license to legally do his or her job. On average, low- and medium-income jobseekers in licensed professions are required to spend nine months in education or training programs, pass an exam, and pay more than $200 in fees, according to the Institute for Justice.

The situation is even worse for felons attempting to reenter society after serving time. According to the Alliance for a Just Society, states have, on average, 56 occupational licensing and 43 business licensing laws that ban applicants with felony convictions. In many instances, felons are immediately disqualified from obtaining a license, even if the job has little to do with their offense.

The Michigan Legislature is considering a series of bills that would increase transparency requirements on licensing authorities and block licensing agencies from denying a license for a past criminal offense, so long as it is not directly related to the field of work a license applicant is attempting to enter. These reforms could open up more than 500,000 jobs to Michigan residents with a criminal record, according to Michigan Capital Confidential.

The first set of bills, House Bills 4488 and 4492, would clearly define the “good moral character” metric that is used by some licensing boards to deny licenses to those with criminal records. The bills would clarify that licensing boards or agencies would not be allowed to use a judgment from a civil action as evidence of bad moral character, and licensing boards would also be prohibited from using a criminal conviction as the sole standard upon which to base a decision. Licensing boards would be mandated to use other factors when considering an applicant who has previously committed a crime, including whether the crime would have a direct negative effect on the individual’s ability to work within a particular field and how long ago the crime was committed.

The second reform, would improve transparency for licensing boards. House Bill 4493 would require the state Department of Licensing and Regulatory Affairs to file an annual report to the Michigan Legislature outlining the number of people denied a license due to a “lack of good moral character” and the reasons given for these denials.

Giving former offenders the opportunity to reenter the workforce is important. Each year, more than 10 million adults are freed from prison and finding a job is a serious challenge for them. Obtaining gainful employment is one of the most powerful tools for lowering recidivism. According to a study from the Manhattan Institute, ex-offenders who quickly found employment after being released were 20 percent less likely to return behind bars.

States should provide an environment in which all residents, including offenders, can obtain a good-paying job to provide for their families. The bills now under consideration would be positive first steps toward reintegrating former offenders back into society. By lowering these barriers, prosperity would increase, more jobs would be created, and more people would join the workforce. Perhaps most importantly, it’s likely fewer offenders would feel compelled to commit future crimes, since one of crime’s leading drivers is poverty.

The following documents examine occupational licensing in greater detail.

How to Help Those with a Criminal Record Find Work
Jarrett Skorup of the Mackinac Center discusses how states can make it easier for those with a criminal record to find work and stay out of the prison system.

To Help Ex-Offenders Get Jobs, Some States Reconsider Licenses
Sophie Quinton of Stateline examines the efforts by states to change how licensing boards consider licenses for ex-offenders.

Once a Leader, Michigan Now Falling Behind in Licensing Reform
Jarrett Skorup of the Mackinac Center examines how Michigan, which has long been a leader in licensing reform, is beginning to fall behind other states and is now losing jobs as a result.

The Consideration of Criminal Records in Occupational Licensing
This factsheet, produced by the CSG Justice Center’s National Reentry Resource Center in partnership with the National Employment Law Project, is designed to serve as an informational outline for policymakers and other stakeholders who want to learn more about obstacles that individuals with criminal records face when seeking employment due to state occupational licensing policies.

Working with Conviction: Criminal Offenses as Barriers to Entering Licensed Occupations in Texas
Marc Levin, Director, Center for Effective Justice at the Texas Public Policy Foundation examines the barriers making it difficult for ex-offenders to receive professional licenses in Texas an make several suggestions on how the state can reform this process.

Unlicensed & Untapped: Removing Barriers to State Occupational Licenses for People With Records
This paper from the National Employment Law Project examines the significant flaws in state occupational licensing criminal background check requirements and the issues created by blanket bans.

The Effects of Occupational Licensure on Competition, Consumers, and the Workforce
This paper by the Mercatus Center at George Mason University examines the costs and benefits of occupational licensing regulations on consumers, the economy, and the workforce, and it also recommends areas in need of reform.

Bottleneckers Beware: Occupational Licensing Reform Bills Filed Across the Nation
Matt Powers of the Institute for Justice examines the growing trend in states to reduce burdensome occupational licensing laws, which impede dozens of industries nationwide.

Right to Earn a Living Act
The Goldwater Institute argues the burdens of occupational licensing in many states are excessive and should not be placed on those who want to earn an honest living. Instead, governments should bear the burden of justifying the restrictions. The authors argue states should enact a Right to Earn a Living Act to protect freedom of enterprise. By doing so, they will ensure that economic opportunity is not merely a promise but a reality.

License to Work: A National Study of Burdens from Occupational Licensing
The Institute for Justice conducted a national study to measure how burdensome occupational licensing laws are for low-income workers. The authors found “the barriers imposed by licensure schemes on those wishing to enter the 102 lower-income occupations we studied are not only widespread but often severe, arbitrary and irrational.” The authors conclude, “As millions of Americans struggle to find productive work, one of the quickest ways legislators can help is to simply get out of the way: Reduce or remove burdensome regulations that force job-seekers and would-be entrepreneurs to spend precious time and money earning a license instead of working.”

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus, host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact the government relations team at [email protected] or 312/377-4000.