Gov. Gretchen Whitmer was inaugurated on Jan. 1, 2019 and she is already busy working on a number of her campaign promises. From fixing the roads to making health care easier to access and more affordable, her priorities are numerous. However, one was conspicuously missing from the list: occupational licensing reform.
Occupational licensing is the concept that people ought to be licensed to perform certain jobs. In theory, it sounds appealing. Who wants a doctor or dentist without a license? However, in practice, it can (and does) get applied to far more mundane activities, like shampooers (who need a license to literally shampoo hair?). Per the Institute of Justice, in the state of Michigan, acquiring that shampooing license would run you about $200 and would take 15 days short of a full calendar year (1500 clock hours). Driving to Indianapolis from Detroit, on the other hand, would take you about four hours and the state of Indiana does not require licensing for such a mundane task, which would make setting up shop significantly less arduous.
There are two other main issues with occupational licensing: their disproportionate impact on society’s disadvantaged and how they lead to regulatory capture on an epic scale. It goes without saying that the less well-off have less money to spend on acquiring these licenses, but what can go under the radar is that this effectively locks people out of certain career paths for absolutely no good reason other than them not having exorbitant amounts of money to blow on unnecessary licenses. In addition, this kind of licensing can be very problematic from a free market standpoint because it leads to regulatory capture. Regulatory capture is when the government creates an agency and it ends up getting taken over by those it was supposed to regulate, so the agency now acts in the best interests of the companies represented rather than the people. This happens when occupational licensing boards are led by industry folk. The boards then come up with more and more onerous regulations that do nothing to benefit the people, but instead benefit the corporations and fatten their wallets along the way.
With all of these negatives, you might think, is any of this necessary? Do people really need this much time to learn how to shampoo? Do they really need this strong of a barrier? The answer is no, it is not necessary, and no, we don’t need this long to determine the art of shampoo, and finally, no, we do not need these artificially inflated barriers.
You would think the existence of these boards would be beneficial by making work safer, but unfortunately, you would not be correct. An Obama-era Department of Treasury report puts it very succinctly: “With the caveats that the literature focuses on specific examples and that quality is difficult to measure, most research does not find that licensing improves quality or public health and safety.” What is interesting to note is sometimes this kind of licensing can directly make people more unsafe. In one example discussed by the Mercatus Center at George Mason University, additional licensing restrictiveness for electricians tends to be associated with fewer electricians per capita, which is associated with more accidental electrocutions.
Now, for the good news. Former Gov. Rick Snyder made a lot of progress in this area by creating a new office to focus on ending burdensome regulation called the Office of Regulatory Reinvention, which eventually issued a report on the status of licensing in Michigan. Nearly seven years ago, that report was released, and it had a number of immediate positive effects and a number of burdensome rules were cut (including ones that regulated barbershop wastebasket sizes). Better than the report and its changes is a letter the governor wrote to the state House and Senate leaders, in which he eloquently stated his desire to not unnecessarily overregulate: “We should enact new restrictions only when they are absolutely necessary to protect the public welfare.”
Whitmer has a chance to continue this legacy and lend it additional support, and she should absolutely seize it. Since the 2012 report, Snyder slashed seven requirements. This may seem small, but it represents tremendous progress on this front and Whitmer should continue quickly.
This is a bipartisan issue and people all over the political spectrum are working to make sure this kind of reform continues to pick up movement. Think tanks as diverse as the R Street Institute and the Center for American Progress both blast much of occupational licensing done today because many people see the problems with it. Those on the right can support reform because it helps get government out of the private sector, and those on the left can support reform because it helps disadvantaged members of society.
Whitmer can become the champion of a new generation of regulation busters, as the ball is in her court.