Burdensome licensing laws often produce wide-ranging negative economic effects. When a state imposes an onerous licensing regime, competition decreases and the price of basic services increases. In many instances, these laws are unnecessary; government involvement does not guarantee better or safer services. Louisiana’s occupational licensing laws are among the most burdensome in the United States. Louisiana currently ranks sixth-worst in occupational freedom, according to the Mercatus Center at George Mason University.
Eliminating excessive licensing requirements and allowing voluntary certification are viable options that will empower consumers to choose the best services on their own, thus allowing the free market to flourish. By imposing too many occupational regulations through registration, certification permits, and licensure, states have a strong influence on dozens of industries, making it more difficult for new and existing businesses to operate or expand, and creating a system in which cronyism thrives.
Louisiana requires “71 out of 102 moderate-income occupations [to be] licensed,” which is more than any other state according to the Institute for Justice (IJ). IJ also points out that of the 71 licenses required for moderate-income occupations in Louisiana, 29 are required in fewer than half the states across the country. Louisiana is currently the only state to require florists to obtain an occupational license.
Fortunately, both the legislature and Gov. John Bel Edwards (D) recognize the need for occupational licensing reform. One plan, proposed by state Rep. Julie Emerson (R-Carencro), would establish a sunrise and sunset review process of all occupational regulations. Under this legislation, the executive branch would be required to only allow the least restrictive regulations necessary to protect consumers from present, significant, and empirically substantiated harms.
The bill would require the state government to presume free-market competition and private sector remedies are sufficient to protect consumers, not additional regulations. The bill would also recommend policymakers, whenever possible, repeal occupational regulations or convert occupational licensing to less restrictive regulations.
A second proposal, also offered by Emerson, would repeal occupational license provisions on retail and wholesale florists.
Morris Kleiner, a professor of public affairs at the University of Minnesota and a chair in labor policy for the AFL-CIO, examined the effects of occupational licensing laws on the price and quality of products and found these laws unnecessarily harm consumers by increasing prices of goods and services without providing any appreciable quality increases in a 2015 article published by The Hamilton Project.
Occupational licensure laws have an especially detrimental impact on lower-income consumers and entrepreneurs and the licensing process places unnecessary hurdles for jobseekers. On average, low- and medium-income jobseekers in licensed professions are required to spend nine months in education or training, pass an exam, and pay more than $200 in fees, according to the Institute for Justice.
Another option Louisiana should consider is the Right to Earn a Living Act (RELA), a model bill written by the Goldwater Institute. RELA would explicitly require all licensing rules or ordinances to “be limited to those demonstrably necessary and carefully tailored to fulfill legitimate public health, safety, or welfare objectives.” Goldwater Institute Director of National Litigation Jon Riches argues RELA would put “the burden of proof back where it belongs—on the regulators who restrict economic freedom, instead of the job-seeker.”
Like all states, to prosper, Louisiana needs to maximize opportunities for businesses and citizens. Removing unnecessary and onerous occupational licensing laws that create barriers to entry and stifle innovation would be a good first step toward empowering entrepreneurs to start their own businesses, the ultimate engine for economic growth.
The following documents examine occupational licensing in greater detail.
Restoring the Right to Earn a Living: A Common-Sense Solution to Occupational Licensing Job Barriers
https://pelicaninstitute.org/restoring-the-right-to-earn-a-living/
Goldwater Institute Director of National Litigation Jon Riches examines the burdens inflicted by onerous job licensing requirements in Louisiana. “For too many professions, occupational licensing requirements do not exist to protect public health and safety—rather, they exist to protect incumbent industries or special interests,” Riches wrote. “The percentage of jobs requiring a license has exploded over the last 60 years, and in a state like Louisiana, which has slow job growth and low wages, thousands of job-seekers are being unnecessarily blocked from meaningful work.”
How Louisiana’s Occupational Licensing Requirements Reduce Opportunity and Prosperity
https://pelicaninstitute.org/how-louisianas-occupational-licensing-requirements-reduce-opportunity-and-prosperity/
This article from the Pelican Institute examines Louisiana’s occupational licensing regime and how it effects the availability of the jobs in the state.
Bottleneckers Beware: Occupational Licensing Reform Bills Filed Across the Nation
http://ij.org/bottleneckers-beware-occupational-licensing-reform-bills-filed-across-nation/
Matt Powers of the Institute for Justice examines the growing trend in states to cut back on burdensome occupational licensing laws, which hold back dozens of industries nationwide.
Right to Earn a Living Act
https://goldwaterinstitute.org/article/right-to-earn-a-living-act/
The Goldwater Institute argues the burdens of occupational licensing in many states are excessive and they 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.
Occupational Licensing: Ranking the States and Exploring Alternatives
http://heartland.org/policy-documents/occupational-licensing-ranking-states-and-exploring-alternatives
Adam Summers of the Reason Foundation addresses the impact of occupational licensing on the labor market. Service quality and health and safety “may actually be diminished by occupational licensing,” he finds. Through high prices, reduced competition, and arbitrary requirements, the government thus hurts the average consumer and worker. Licensing is for special interests, not public interests, he writes. These laws hurt the poor and minorities disproportionately, he notes, proving the government is not helping those they say they are.
Occupational Licensing: Protecting the Public Interest or Protectionism?
http://heartland.org/policy-documents/occupational-licensingprotecting-public-interest-or-protectionism
Morris Kleiner reflects on the growth of the strictest form of occupational regulation, licensing. The result is potential job losses and an increase in prices, he finds. The costs of occupational licensing show the practice must be ended or changed, he says, and he proposes certification of occupations which does not limit entry and mobility and may prevent job losses.
The Prevalence and Effects of Occupational Licensing
http://heartland.org/policy-documents/prevalence-and-effects-occupational-licensing
Morris Kleiner and Alan Krueger note research shows nearly 30 percent of the U.S. workforce is required to obtain a license to work. The authors find licensing costs consumers more and reduces their ability to choose services for themselves.
License to Work: A National Study of Burdens from Occupational Licensing
http://heartland.org/policy-documents/license-work-national-study-burdens-occupational-licensing-1
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 John Nothdurft, Heartland’s director of government relations, at [email protected] or 312/377-4000.
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
