Occupational licensing is a government issued permission slip to work for some people in certain professions. Roughly one in five US workers need such a permission slip. The Institute for Justice, a public-interest law firm, ranked Arkansas as the 6th most burdensome state for licensing in their latest edition of License to Work, a publication which ranks states on their varying licensing burdens. That’s compared to Louisiana in 43rd and Mississippi at 46th. This is a situation where it is not good to be ranked higher than our neighboring states.
ACRE Research Associate Zachary Burt explains the problems and possible solutions on Believe in Arkansas on November 4. Believe in Arkansas is a recurring Facebook Live show hosted by Ryan Norris of Americans For Prosperity-Arkansas. The discussion focused on licensing’s impact on Arkansas’s economy and workforce. You can watch the full discussion on Facebook.
Examples of common licenses include physicians, landscape contractors, cosmetologists, massage therapists, and many more. These licenses are intended to protect public health and safety, but they often have harmful economic impacts. Burt and Norris discussed the primary ways licensing impacts the economy, including:
- Economic research on the effects of occupational licensing shows that licensing reduces job opportunities and entrepreneurship by acting as a barrier to entry. People are less likely to pursue a job if there are a lot of hoops you have to jump through before you can start working and making money.
- Licensing limits geographic mobility. Since many states have differing requirements for licensure, and often do not have reciprocity with other states, licensed individuals may choose not to relocate for better opportunities because of the difficulty of getting licensed in a new state.
- Licensing leads to increased prices. Studies show that licensing may cost consumers an additional $203 billion annually for services. Lower-income individuals are hit the hardest by artificially high prices.
Norris asked if occupational licensing actually contributes to public health and safety in an age of online reviews and a wide variety of options for services. Arkansas has relatively new sunset review process for licenses. This process is intended to see if a given license actually helps protect consumers health and safety, which they may do in some cases. However less burdensome types of regulations such as certifications and registries would often work just as well. There are too many occupational licenses, and the legislators involved in the sunset review process should take the opportunity to make it easier to work in Arkansas.
For more information:
For more on occupational licensing in Arkansas, visit our labor market regulation page.
ACRE Scholar Dr. Thomas Snyder was a coauthor on this 2017 report about occupational licensing in Arkansas.
For more on Believe in Arkansas, visit their website here.