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Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs

November 4, 2014

Do you have a love of fabric, furniture, and a talent for decorating? In a few states, unless you have a license, it’s tough luck if you want to start a decorating business. Most states actually have laws that limit the use of the title “interior designer.”

Lauren Boice, a cancer survivor and former hospice nurse’s assistant, has a business that connects licensed cosmetologists with homebound elderly, sick, and terminally ill patients who need in-home services. Although she is strictly a coordinator and doesn’t provide any cosmetology services herself, the Arizona Board of Cosmetology insists she must open an actual physical salon that she will never use.

Every state licenses medical doctors, lawyers, nurses, and chiropractors—professions that most people would say should be licensed. Every state also licenses architects, surveyors, and cosmetologists—professions that some people might be less likely to agree should be licensed. The vast majority of states license other professions such as accountants, athletic trainers, insurance agents, massage therapists, and private detectives. Then there are states that license animal caretakers, craft artists, and even librarians.

Then there are the infamous African hair braiding cases. Across the country, cosmetology boards are shutting down businesses run by African immigrants where they braid people’s hair into intricate patterns using no chemicals or dangerous products. They want these hair braiders to go to cosmetology school and become licensed, even though the vast majority of schools don’t even teach the technique of African hair braiding.

More and more, licensing represents a growing barrier to entering all sorts of occupations. Economic research shows that licensing makes services more expensive and makes it more difficult—often unnecessarily so—for people to enter a new profession. In Arizona approximately 85 professions are licensed and licensing costs the state an estimated $660 million in lost economic activity.

Reforming licensing could open career opportunities and reduce the costs of services without sacrificing consumer safety. This paper recommends six reforms:

1. Create a “sunrise” provision that requires advocates of new licensing proposals to prove their need before they are approved.

2. Require that all licensing laws are periodically reauthorized after a rigorous review process.

3. Require licensing boards to have a supermajority of members drawn from the general public rather than the profession itself.

4. Replace mandatory licensing with voluntary certification.

5. Enact legislation protecting the right to earn a living.

6. Expand the scope of practice for some professionals, allowing them to perform more services.

These reforms would boost job creation and economic activity, as new career opportunities became available in areas once difficult to enter because of costly and often unnecessary licensing requirements.

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