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Occupational Licensing

Fencing Out Opportunity | Occupational Licensing in the Badger State

America has always been rooted in the idea of economic freedom. As Americans, we believe that hard work and determination will reap rewards. We tell our children, rich or poor, that with the right attitude they can grow up to be anything they want in this world. What we don’t tell our children, and we often fail to consider, is that government will often erect barriers to opportunity. Through complex rules and regulations, opportunity shrinks.

This report details the dramatic growth in occupational licensing in Wisconsin and how it serves to fence out opportunity for thousands of workers. As a “government permission slip” to work, occupational licensing is arguably one of the most substantial barriers to opportunity in America today. While some credentialing serves to protect public health and safety, much is rank protectionism – a device to “fence in” those who already have permission to work and “fence out” those who do not.

Fencing Out Opportunity | The Effect of Licensing Regulations on Employment

Occupational licensing laws, or state permission slips to work in certain regulated professions, serve as a major barrier to entry for workers in America. For aspiring cosmetologists, manicurists, massage therapists, and aestheticians, licensing requirements can mean thousands of hours of training, tens of thousands of dollars for school, and regular fees to the state. These laws force people with skills and aspirations to take on debt they cannot afford, defer their dreams, or conduct their trade underground with the accompanying threat of fines and prosecution.

Whereas in 1950 just 1 in 20 workers required a license to work, now close to 1 in 4 do. A previous WILL study found an 84% increase over the last 20 years in licenses regulated by the Wisconsin Department of Safety and Professional Services (DSPS). From 2015 to 2016, DSPS collected more than $19 million in initial and renewal fees for the more than 240 different regulated credentials.

This study examines ten low and moderate income professions and measures how the 50-state patchwork of licensing requirements, fees, and training hours impact employment. We ranked each state with a score according to our Red Tape Index, which measures just how burdensome a state’s regulations are for these occupations. Then, we looked at how employment related to a state’s score on the Red Tape Index.

Land of the Free? | 50 state study on how professional licensing laws lead to fewer jobs

Occupational licensing laws, or state permission slips to work in certain regulated professions, serve as a major barrier to entry for workers in America. For aspiring cosmetologists, manicurists, massage therapists, and aestheticians, licensing requirements can mean thousands of hours of training, tens of thousands of dollars for school, and regular fees to the state. These laws force people with skills and aspirations to take on debt they cannot afford, defer their dreams, or conduct their trade underground with the accompanying threat of fines and prosecution.

In 1950 just 1 in 20 workers required a license to work, now close to 1 in 4 do. With more professionals, and aspiring professionals, running into licensing laws, the case for reform has found an increasingly broad and diverse audience. Coalitions of liberal and conservative activists and policy experts, Democrat and Republican governors, and the Obama and Trump administrations have all embraced the cause of licensing reform. And while progress has been made in this reform movement, rigorous research into the effects of licensing on workers and the broader economy are still in their infancy.

This peer-reviewed study examines, for the first time, the impact of licensing requirements across the country on ten low and moderate income professions. For each state we created a Red Tape Index which measures the license requirements, i.e. fees, training hours, exams required, and minimum age, for ten professions.

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