As cost-of-living soars amid sky-high inflation and economic turbulence, it’s getting harder for many Americans to afford even the bare necessities. Meanwhile, governments at the municipal, state, and federal level are continuing to pile new regulations on top of the old ones—costly mandates that freeze economic growth in its tracks.
Here’s the solution: Government needs to get out of the way, Goldwater Institute Executive Vice President Christina Sandefur said recently as she joined fellow public policy experts on the Atlas Network’s Freedom Worldwide panel to discuss how overregulation in housing and occupational licensing is inhibiting economic freedom.
Sandefur explained how costly housing regulations prevent many potential homeowners from buying and result in many others taking on massive loans. In fact, government regulations account for almost a quarter of the cost for a single-family home. “Cities are largely to blame—and local regulation—for making it almost cost-prohibitive to expand the supply of housing in a way that can address the growing demand,” Sandefur said. “Aesthetic regulations,” she continued, require single-car garages and full basements—even as affordable materials like vinyl are banned. Bureaucrats “like the way certain things look and don’t like the way other things look,” Sandefur added, which “imposes significant costs on the ability to build houses within these restrictions.”
Rather than scaling back on these regulations, governments attempt to fix the problems they caused by piling on more regulations, like rent control or inclusionary zoning – regulations that require developers to offer properties at below market rates. “When you look at the cost of materials, the time, and the regulations that the government places, developers don’t have a huge profit margin there,” Sandefur pointed out. “So, if you tell them now they have to offer homes way below market rates, they’re simply not going to build at all, and that means housing won’t get built where it is needed most.”
The panel discussion also covered another pressing issue: occupational licensing. Today, about one in four jobs requires an occupational license—essentially a government permission slip to work. And these onerous restrictions often fall hardest on younger employees and workers in lower-income professions. “Most of these requirements are on relatively low-income professions but are the beginning of entrepreneurism or are the beginning of a career,” said Daniel Erspamer, CEO at the Pelican Institute for Public Policy in Louisiana.
It gets worse. Licensed, equipped professionals often have to go through the same time-consuming, costly process of obtaining a new license every time they move to a new state. That’s why the Goldwater Institute created the Breaking Down Barriers to Work Act. The reform, now law in more than half the states in the nation, recognizes out-of-state occupational licenses based on the training or testing requirements a licensed applicant has already completed. “People are moving regularly as telework and other options of remote work become more viable,” Erspamer said after Louisiana enacted the reform. Getting rid of these bureaucratic sand traps allows hard-working Americans to skip burdensome requirements and return to work.
Unfortunately, there are many other ways local governments restrict the right to earn a living. Oftentimes, governments impose vague or unclear regulations that can destroy small businesses or make it impossible for families to get the most use out of their property. But as Sandefur noted, Goldwater’s Permit Freedom Act protects Americans against government abuse of permitting requirements. The law eliminates needless red tape, ensuring rules are clear, include explicit deadlines for when government must respond, and can be appealed through a fair process. Citizens should be able to pursue a future free of the unnecessary hassle and financial burden of often arbitrary regulations that govern their lives.
But it’s up to all of us to stand up to government and demand reform. And this is why the Goldwater Institute focuses its work on state and local governments.
“The fact of the matter is, as bad as these local regulations can be, it’s a lot easier to get local, grassroot coalitions to get movement, to get people to show up at city council meetings, and tell stories, and pass reforms,” Sandefur concluded.
Mark Holder is a Ronald Reagan Fellow at the Goldwater Institute.
