This week was significant for the cause of greater opportunity to earn a living in Wisconsin. Two occupational licensing reform bills, spearheaded by a group of Republican lawmakers, seek to provide an important corrective to the decades-long growth in occupational licensing that ensnares more and more workers with red tape and regulations. They deserve support from conservatives.
Occupational licenses are government permission slips to work in certain regulated professions. From physicians, dentists, and pharmacists to cosmetologists, manicurists, and massage therapists, Wisconsin requires licenses to work for hundreds of different professions.
But the growth of licenses, particularly among low and middle income jobs, has become a bipartisan cause for concern. In 1950, just five percent of U.S. workers needed a license to work. Today, it’s estimated that 25-30 percent of workers need a license. These licenses mandate workers to pass exams, reach minimum hours of training, pay fees and renewal fees, and often continuing education requirements once licensed.
It’s a major problem in the Badger State.
Research from the Wisconsin Institute for Law & Liberty (WILL) found an 84 percent increase in license types regulated by the Wisconsin Department of Safety and Professional Services (DSPS) between 1996 and 2016. The department regulates more than 440,000 workers, costing Wisconsin an estimated 30,000 jobs and nearly $2 billion in higher consumer costs.
In addition, a WILL study found that burdensome licensure requirements (fees, training hours, exams, etc.) result in lower employment. Wisconsin was ranked fifth worst in the country for ten occupations and could expect to see significant employment growth in professions like cosmetologists, manicurists, and massage therapists with some modest reform. These burdens were recently highlighted by a Wisconsin Policy Research Institute story where a barber loved by Packers players couldn’t open his own shop due to unique Wisconsin licensing requirements.
In response, Senators Alberta Darling and Chris Kapenga, along with Representatives Rob Hutton and Dale Kooyenga, introduced a bill to create an Occupational Licensing Review Council to study and make recommendations on all existing licenses by the end of 2018. The Council’s goal will be to examine licenses and regulations with an eye towards lowering barriers to entry while preserving licenses and regulations necessary for the health and safety of the public. In addition, this bill creates a “sunrise” process whereby any new license will be objectively scrutinized to determine whether there is clear evidence that new regulation is necessary to protect health and public safety.
Pushing the reform envelope further, Darling, Kapenga, and Hutton also announced a bill to create the framework for a self-certification registration system in Wisconsin. Pioneered in Indiana, self-certification registration is an innovate reform that balances training, market information, and opportunity. Under this system, the state would accredit private training programs and provide those that earn certification with a “state certified” label. This would incentivize training, provide valuable market information, without hindering opportunity or innovation. In other words, it’s a smart, free-market alternative to licensing.
Despite the intense pace of the national news cycle, and a legislature that is increasingly focused on the issue of transportation, these important reforms ought not to be overlooked. As Wisconsin continues its path towards creating a competitive business environment, there ought to be an increased focus on how Wisconsin can also enhance opportunity. Tackling licensing reform is a great start.
Collin Roth is a Research Fellow at the Wisconsin Institute for Law & Liberty.