One particularly prevalent and pernicious form of regulation is occupational licensing. Occupational licensing is essentially a government-issued permission slip required to enter certain regulated occupations. The share of U.S. workers required to hold an occupational license has exploded from around 5% in 1950 to 25% in 2020. Many occupations within the home services industry––which employs nearly six million American workers––require an occupational license, but states vary widely in which occupations they license. 

In a recent National Bureau of Economic Research working paper, Harvard researcher Peter Q. Blair examined the effects of occupational licensing on consumer experiences with Angi’s HomeAdvisor, a popular digital marketplace platform for home services such as home repairs, maintenance, and remodeling tasks. In their analysis, Blair and his co-author examined a 2019 New Jersey law that created a new licensing requirement for pool contractors. The researchers also used national variation in state licensing requirements to assess the impact of licensing across a wider range of service tasks. 

The paper authors use the ‘accept rate’ to measure the impact of licensing. The authors define accept rate as “the likelihood that a customer engaged in search on a digital platform finds at least one worker who is legally permitted to perform the task given the licensing requirements for the task.” They found that New Jersey’s decision to license pool contractors reduced the accept rate by 16 percent. Their analysis of national variation in licensing requirements across a broader set of occupations revealed that licensing reduced the accept rate by 25 percent. In other words, in states where a license is required to perform a task, consumers are significantly less likely to find a qualified service provider relative to states that do not require a license for those same tasks.  

Their findings add to a growing body of literature on the subject which finds occupational licensing reduces the value of these digital marketplaces for consumers. Previous research has shown that occupational licensing’s effects on digital platforms do not result in higher consumer satisfaction or safety, only higher prices. Economists have broadly found that occupational licensing increases prices by limiting the supply of workers in regulated occupations. Typical requirements to obtain a license include education, training, and the payment of fees. These requirements act as a barrier to entry for many prospective workers, especially the poor, formerly incarcerated individuals, and other disadvantaged groups. Given the consistent finding that licensing does not meaningfully improve quality or consumer safety, the presence of licensing is a net loss for consumers. 

This new research, and other similar studies, are important to understanding the impact of government regulation on consumers. Occupational licensing is a perfect example of a well-intentioned policy gone awry; while policymakers may have had noble intentions of protecting consumers and ensuring quality, research has demonstrated that licensing often fails to achieve these goals. Instead, occupational licensing creates barriers to opportunity, raises prices, and, as this new NBER paper suggests, reduces the value created by technological innovations. These research findings further suggest that occupational licensing reform is necessary and that policymakers should be mindful of unintended consequences when establishing regulatory frameworks.  

The post Occupational licensing undermines some of the value of technological innovation  appeared first on Reason Foundation.

An occupational license is essentially a government-issued permission slip to enter into certain occupations. To obtain a license, workers are generally required to complete lengthy training requirements, pass exams, and pay fees. Occupational licensing is presented as a way to protect consumers, but most research indicates that licensing has little or no effect on quality or safety. 

Instead, economists broadly consider occupational licenses to be anti-competitive. Rather than protecting consumers, licensing can often serve to protect incumbent workers against competition from new entrants. The anticompetitive effects of occupational licensing can result in higher wages among licensed workers, but at the cost of higher prices for consumers. 

Moreover, burdensome requirements can lock many workers out of licensed occupations. Research shows this effect is particularly detrimental among lower-income workers, military spouses, and former criminal offenders.   

Recognizing these problems, a growing number of lawmakers and stakeholders across the political spectrum have supported occupational licensing reform in recent years. While most authority over licensing rules lies with states, there have been bipartisan efforts for reform at the federal level.

In 2015, the Obama administration released a report that compiled research on the effects of licensing and outlined a framework for reform. Specifically, the Obama administration report concluded that while licensing can be beneficial in some cases:

“the practice of licensing can impose substantial costs on job seekers, consumers, and the economy more generally. This is particularly true when licensing regulations are poorly aligned toward consumer protection and when they are not updated to reflect a changing economy.”

President Barack Obama later issued a Presidential Memorandum aimed at preventing former criminal offenders from being unfairly denied federally-issued licenses. The Obama administration also provided funding for state-level reform efforts. 

President Donald Trump followed up with an executive order in late 2020 that encouraged states to enact licensing reforms and outlined several principles for reform. Broadly, the order encouraged states to eliminate unnecessary licenses, reduce overly burdensome licensure requirements, recognize licenses issued by other states, and make special considerations for military spouses and individuals with criminal records. 

On the campaign trail, now-President Biden promised to “put an end to unnecessary occupational licensing requirements.” His campaign website stated that:

While licensing is important in some occupations to protect consumers, in many occupations licensing does nothing but thwart economic opportunity. If licensed workers choose to move to new states for higher-paying jobs, they often have to get certified all over again. As president, Biden will build on the Obama-Biden Administration’s efforts to incentivize states to reduce unnecessary licensing requirements and to ensure licenses are transferable from one state to the next.

It now appears President Biden may soon make good on that promise through an executive order. According to The New York Times, “The White House is planning to release an executive order on competition policy,” including several provisions aimed at increasing labor market competition. The order will reportedly encourage the Federal Trade Commission to ban “unnecessary” licensing restrictions. 

The exectuive order is also expected to address non-compete agreements, corporate mergers, and the ability of employers to share information on worker pay.  

The efficacy of the order will likely depend on what regulatory authorities decide to do. As noted, most occupational licensing requirements are determined at the state level, so federal authority is limited and may encounter legal challenges. 

Nonetheless, the Biden administration’s effort is admirable and signals continued bipartisan support for occupational licensing reform. Any potential progress at the federal level would be welcome, and state lawmakers will have further reason to view licensing reform as a rare opportunity to work across the aisle to improve the lives of working Americans. 

The post Biden Executive Order Expected to Target Occupational Licenses appeared first on Reason Foundation.

licensing requirements unless local licensing is otherwise authorized by general law.

Specifically, HB 735 precludes local governments from requiring occupational licenses for job scopes including––but not limited to––painting, flooring, cabinetry, interior remodeling, handyman services, driveway or tennis court installation, decorative stone, tile, marble, granite, or terrazzo installation, plastering, stuccoing, caulking, canvas awning installation, and ornamental iron installation. However, local licensing of journeymen in the plumbing, pipefitting, mechanical, HVAC, and electrical and alarm system trades are exempt from preemption under the bill.

Today more than 1 in 5 workers nationwide are required to obtain a license to work––this is up from just 5 percent in the 1950s. In Florida, it is estimated that about 21 percent of workers need a license just to do their job.

An abundance of research indicates that occupational licensing is often an anticompetitive form of regulation that serves to protect incumbent workers from new entrants. As a result, aspiring workers are locked out of the market, and consumers pay more for services provided by license holders.

In fact, occupational licensing is estimated to cost consumers up to $203 billion annually and results in the loss of 2.8 million jobs nationwide. In Florida alone, licensing is estimated to result in nearly 130,000 fewer jobs and approximately $460 million in deadweight economic losses annually.

Regarding the impact of local licensing, one study found that the anti-competitive effects of licenses issued at multiple jurisdictional levels were significantly greater than those of licenses issued by only one jurisdiction.

Fortunately, occupational licensing reform is a bipartisan effort and has received support from the Obama, Trump, and Biden administrations. Several states have also taken up reforms to eliminate unnecessary licenses, reduce overly burdensome license requirements, and recognize licenses across state lines.

In recent years Florida has made significant progress peeling back onerous licensing requirements at the state level. However, local licensing continues to pose challenges for the state’s workers and consumers. HB 735 would simplify and standardize the requirements for licenses that may currently be issued at the local level. This will eliminate an unnecessary layer of regulation, and in some cases, reduce the total fees workers are required to pay for their license. HB 735 would also lend greater flexibility to workers and enhance worker mobility.

Ultimately, further reforms are needed in Florida to reduce the burden of state licensure and to recognize licenses issued by other states. But HB 735 is an important step toward trimming the regulatory bloat of occupational licensing and will help more Floridians find gainful employment.

The post Testimony: Overburdensome Occupational Licensing Hurts Florida’s Economy appeared first on Reason Foundation.

Due to factors including aging patient populations and doctor retirement rates, the U.S. is expected to see a shortage of between 54,100 and 139,000 physicians by 2033, according to a recent report from the American Association of Medical Colleges. Among the states predicted to be hardest hit by the shortfall are Louisiana, Mississippi and New Mexico.

To address the public-health problems the current shortage has caused during the pandemic, some states have temporarily allowed out-of-state doctors to practice within their borders with little to no additional training or certification. State policymakers now have a great opportunity to make the temporary permanent.

Since 1847, the American Medical Association has lobbied every state to enforce their own medical-licensing laws, with peripheral federal oversight, even though licensing qualifications to practice medicine are generally dictated by national specialization organizations such as the American Board of Surgery and are practically identical from state-to-state. Such consistency should make state-level licensure redundant and unnecessary.

However, until recently, doctors were unilaterally barred from practicing in states where they had not been licensed. They couldn’t even provide telemedicine support to patients beyond their state borders. These laws were defended on the grounds that they promote safety, but as with most professional licensing laws, the real motivation was, at least in part, money. Medical boards have used licensing regimes to rake in over $100 million annually in certification and testing fees from aspiring doctors.

When the COVID-19 crisis hit the U.S. health-care system last year, the limitations of state licensing quickly became apparent. Hospitals in regions with high COVID-19 case numbers were in desperate need of more physicians, and the temporary relaxation of cross-state licensing restrictions enabled hard-hit hospitals to staff up quickly to better cope with surges in COVID cases. As a result of this successful experiment born of crisis, even the AMA is now beginning to support the idea of universal licensing within the United States.

One state is pointing the way to more sensible licensing regimes. Utah has not only permanently opened its doors to doctors from other states but also implemented policies to speed up their licensing processes. In fact, Utah has been at the forefront of medical access for years, even allowing doctors licensed in Canada to practice within its borders since 2014.

And the state has continued to build on these sensible policies: Anticipating the COVID-19 hospitalization surge in late March 2020, Gov. Gary Herbert signed legislation to streamline licensing in nearly all non-medical fields. That freed up resources for Utah’s Division of Occupational and Professional Licensing to focus on approving new doctors who wanted to work in the state, and division staff were able to approve 22 percent more doctors in 2020 compared to 2019. It’s likely that these additional doctors are contributing to Utah’s low COVID-19 death rate, currently the nation’s sixth-lowest.

Technically, Utah is willing to license doctors certified in any country, but the state gives preferential treatment to Canadian-certified doctors because that country’s licensing requirements are so similar to those in the United States. Non-Canadian foreign doctors still must complete two years of Utah medical residency before they can practice in the state. Many other states require Canadian doctors to complete this two-year residency as well, but Utah’s policy has allowed a number of Canadian doctors to treat COVID-19 patients in the state immediately.

But why stop at Canada? New Jersey did temporarily allow physicians from other countries to practice in the state at the start of the COVID-19 pandemic. Unfortunately, the state has already suspended new applications, but such provisional licensing for all foreign doctors should be the next step for all states.

The COVID-19 pandemic has shed light on regulations that have prevented the U.S. health-care system from operating as efficiently as possible. States with immediate physician needs amid the pandemic, and those expecting to see doctor shortages in the coming years, should follow Utah’s lead. It’s never been more important to allow doctors to practice where they are most needed.

A version of this column previously appeared in Governing. 

The post How State Policies Are Worsening The U.S. Doctor Shortage appeared first on Reason Foundation.

Occupational licenses are essentially government-issued permission slips to enter into regulated occupations. Over recent decades, the number of licensed occupations has expanded dramatically. While licensing was initially intended to ensure consumer safety, many commonly licensed occupations do not pose significant risks to health or safety. 

Rather than protect consumers, occupational licensing often serves as a form of anti-competitive protectionism for licensed workers. Burdensome licensing requirements like mandatory training, fees, and exams raise barriers to entry and limit competition in licensed occupations. As a result, licensing requirements inflate the wages of licensed workers and increase costs for consumers. 

Prior to recent reforms, Florida’s licensing requirements were ranked as the fifth-most burdensome in the nation. A recent study from the Institute for Justice estimated that Florida’s licensing laws cost the state over 129,000 jobs and up to $459.9 million annually.

The Occupational Freedom and Opportunity Act cuts red tape for thousands of workers and will significantly improve Florida’s standing relative to other states. Specifically, the new law eliminates licensing requirements for interior designers, hair braiders, hair wrappers, body wrappers, nail polishers, makeup artists, and boxing announcers and timekeepers. It also reduces training requirements for barbers and cosmetology occupations. 

While the law did not include universal recognition of all licenses issued by other states, it did create new pathways to license recognition for 11 occupations including barbers, cosmetologists, engineers, and construction contractors. The law further directs the Department of Business and Professional Regulation to identify additional opportunities for license reciprocity. 

As noted in a statement from the Institute for Justice, the law “repeals more occupational licensing laws than any licensing reform ever passed by any other state.” These reforms are substantial and should be recognized as such, but Florida lawmakers should continue to pursue further deregulatory efforts.

Beginning last year with Arizona, 11 states have passed, or are considering, legislation to allow universal license recognition. Universal recognition policies require state licensing boards to recognize licenses issued by other states, but the process isn’t automatic. Workers seeking license recognition are still required to submit applications to the respective licensing board and meet certain criteria. Typically, universal recognition laws require that applicants relocate to the state, pass background checks, pay fees, and have maintained licensure in another state for a minimum period of time. 

One common problem with universal license recognition is that many occupations aren’t licensed in every state. For example, Arizona requires opticians to be licensed but Texas does not. Consequently, opticians in Texas are not able to take advantage of Arizona’s universal recognition policy even if they’ve been working in Texas for years. Iowa recently became the first state to offer a solution to this problem by allowing work experience to count towards training requirements. 

Another area for further reform in Florida is licensing restrictions for people with criminal records. In many states, former criminal offenders are legally prohibited from receiving licensure or may be denied licensure based on vague ‘moral character’ requirements. In June of this year, the Institute for Justice released a report that compared state laws related to licensure of former offenders. Florida received a grade of D+ despite adopting related reforms in 2019. 

The 2019 reforms prohibit licensing boards from denying applications on the sole basis of the applicants’ criminal history and prevent boards from considering most offenses after five years. However, ‘forcible felonies’ including burglary and robbery are exempted from these reforms if licensing boards determine that an offense is ‘related’ to the practice of a profession. This allows boards substantial discretion in determining which offenses can be used to deny licensure. Licensing boards also may still consider an applicant’s criminal history when assessing their moral character. 

Additional occupational licensing reform efforts should eliminate moral character requirements and prevent boards from denying licensure based on applicants’ criminal records unless their prior offenses are ‘directly related’ to the occupation in question. Moreover, the burden of proof should fall on the licensing board to demonstrate that an applicant would pose a genuine threat to public safety before denying their application.  

Florida’s recent reforms are significant, and lawmakers deserve recognition for their efforts. However, it is important that Florida continues to reduce barriers to migration and expand economic opportunities by adopting universal license recognition and eliminating restrictions for former criminal offenders. 

The post Florida Passes Major Occupational Licensing Reform But More Needs to Be Done appeared first on Reason Foundation.

In the three decades between 1980 and 2010, the number of prisoners under state and federal jurisdictions increased by nearly 1.3 million. The most significant growth occurred during the 1980s and 1990s before leveling off throughout the 2000s. The prison population has slowly declined since 2009, but nearly 1.5 million people remain incarcerated in state and federal prisons each year. When jails, juvenile facilities, and immigration detention centers are included, that figure rises to 2.3 million.

Source: U.S. Bureau for Justice Statistics, National Prisoner Statistics Program

Black and Hispanic Americans are incarcerated at significantly higher rates than white Americans. According to a recent report from the U.S. Bureau for Justice Statistics, 1,134 out of every 100,000 black Americans were incarcerated in 2018. While the incarceration rate among black Americans dropped by 28 percent between 2008 and 2018, black males remain incarcerated at approximately 5.8 times the rate of white males. Racial disparities in incarceration rates are most dramatic among younger age groups. Black males between 18 and 19 years old are 12.7 times more likely to be incarcerated than their white peers. 

One reason behind high incarceration rates in the U.S. is the rate at which prisoners return to prison after release. Another report from the Bureau for Justice Statistics found that 83 percent of prisoners released in 2005 were rearrested, or recidivated, in the nine years following their release. The vast majority of those who recidivated, 82 percent, did so within three years of release. The recidivism rate among black prisoners was 86.9 percent compared to 80.9 percent among white prisoners. 

Prisoners whose most serious offense was property-related were among the most likely to be rearrested, suggesting that financial motivations play an important role in the return to criminal behavior. Moreover, much of the academic literature on recidivism suggests that access to gainful employment is a key factor for reintegrating former criminal offenders into society. A report from the U.S. Sentencing Commission found that recidivism rates were 20 percentage points lower among prisoners with stable employment compared to those who were unemployed. Among prisoners that do recidivate, those employed post-release go longer without re-arrest. 

From a policy perspective, reforms that reduce barriers to employment for former offenders should be considered “low-hanging fruit” in the effort to reduce mass incarceration and the high rate of recidivism. One such barrier, occupational licensing, is particularly ripe for reform.

An occupational license is essentially a government-issued stamp of approval to enter into certain regulated occupations. In the 1950s, just five percent of workers required a license to do their job. Today, nearly one in four workers hold an occupational license. While licensing laws were originally intended to protect public health and safety, many licensed occupations present no such risk to consumers. For instance, state and local governments require licenses for a wide range of low-risk occupations like barbers, hair braiders, auctioneers, and tour guides. 

Onerous licensing standards including minimum education requirements, mandatory training, and excessive fees are particularly burdensome for former criminal offenders looking to get back on their feet. To make matters worse, licensing laws in many states explicitly prohibit former offenders from obtaining licensure or include vague “moral character” requirements. 

Several studies have linked occupational licensing laws to higher rates of recidivism. For example, a policy report from economist Steven Slivinski found that recidivism rates increased more rapidly in states with more burdensome licensing laws between 1997 and 2007. Recidivism rates increased most significantly in states that allowed licensing boards to deny licensure based solely on an applicant’s criminal history. These “prohibition states” experienced a 9.4 percent increase in recidivism rates compared to an average increase of 2.6 percent. Meanwhile, recidivism rates actually decreased by 4.2 percent in the least restrictive states. 

Licensing laws not only raise barriers to reintegration, but they also contribute to the problem of overcriminalization. In fact, violation of licensing laws can result in heavy fees or even jail time. Moreover, two examples from Florida demonstrate how enforcement of licensing can result in wildly excessive use of police force. 

In 2010, masked officers from the Orange County Sheriff’s Office wearing bullet-proof vests conducted SWAT-style raids of barbershops around the Orlando area. In total, 37 people were arrested in at least nine barbershops—most of whom charged with the crime “unlicensed barbering.” In reality, the raids were intended to find drugs or weapons but were conducted under the auspices of routine licensing inspections to avoid the need for search warrants. However, the raids only resulted in one arrest on felony drug and weapons charges. Another two arrests were for misdemeanor marijuana possession. 

More recently, in 2019, the Hillsborough County Sheriff’s Office carried out a sting operation to catch unlicensed handymen. Dubbed “Operation House Hunters” the sting resulted in 118 arrests, 110 of which were of first-time offenders. Most of the arrests were for “unlawful acts in the capacity of a contractor,” a misdemeanor offense punishable by up to $1,000 in fines and 12-months in jail. This sort of operation isn’t unique to Florida. Officers in California arrested 13 unlicensed contractors in a 2019 sting. Another sting in New York resulted in fines totaling $65,000. 

Lawmakers should consider a number of licensing reforms. First, licensing requirements should be eliminated for occupations that pose no credible risk to consumers. Among licenses that cannot be eliminated, requirements should be minimized and focused on ensuring consumer safety.

Second, licensing boards should not be allowed to deny licensure based on applicants’ criminal records unless their prior offenses are directly related to the occupation in question.

Finally, enforcement of licensing laws should be left to state agency inspectors rather than armed police officers. 

Of course, occupational licensing reform is only a small part of broader efforts to fix the broken criminal justice system. But eliminating unnecessary licensing requirements and reining in police authority to enforce licensing laws could help keep former offenders out of prison and reduce excessive uses of force. 

The post Unnecessary Licensing Laws Are Contributing to the Criminal Justice Crisis appeared first on Reason Foundation.

A recent article in the Washington Post deemed millennials to be “Unluckiest Generation in U.S. History.” Another, from The Atlantic’s Annie Lowrey, declared that millennials are the new “Lost Generation.” As Lowrey notes, many millennials entered the workforce amid the Great Recession of the late 2000s, leaving many saddled with debt and unable to find secure employment. To make matters worse, younger workers comprise a disproportionate share of employment in the industries hit hardest by the economic impacts of COVID-19.

There is some evidence that today’s young people are already faring worse than our parents fared at the same age. A 2019 Pew report found that millennials have less wealth, are less likely to own a home, and are starting families later than previous generations. But back-to-back economic calamities don’t inherently doom today’s young workers to a lifetime of economic hardship. Rather, the greatest threat to our economic success is the growing thicket of onerous regulation that increases the cost of housing, makes it harder to find work, and exacerbates economic inequality.

The homeownership rate among millennials is about 8 percentage points lower than Baby Boomers and Gen-Xers when they were in this same age group. The explosive rise in home prices is a key driver behind that trend. While home prices have historically tracked closely with construction costs, prices have outpaced costs since the mid-1980s. This divergence is largely due to regulations that help limit the supply of housing.

Regulations like lot-size minimums, density restrictions, and parking requirements—collectively referred to as “exclusionary zoning” policies—constrict supply by reducing the amount of housing that can be built in a given area. Exclusionary zoning protects the property values of existing homeowners, but prices many potential homebuyers, especially younger ones, out of the market. The supply-limiting effects of these regulations can be observed in both urban and suburban settings—in rising rents and in rising single-family home prices.

Exclusionary zoning could also be contributing to growing income inequality. Land use regulations tend to be most restrictive in growing coastal cities with the greatest opportunities for employment, and regulations in those areas have only become more stringent since the Great Recession. Consequently, young workers who might otherwise flock to these areas can’t afford to relocate because of unnecessarily high housing costs.

Rising housing costs aren’t the only thing reducing geographic mobility and employment opportunities for young workers. Over recent decades, the number of laws requiring workers to receive government permission to work has risen dramatically. In 2019, more than 20 percent of American workers held an occupational license compared to less than 5 percent in the 1950s. There is little evidence these laws accomplish their stated goal of improving quality and safety. However, mounting evidence suggests that occupational licensing laws reduce economic mobility and opportunities for employment.

The growth of occupational licensing laws has been particularly detrimental for young workers. Similar to the way exclusionary zoning benefits existing homeowners to the detriment of newcomers, burdensome occupational licensing requirements inflate the wages of older, existing workers by creating barriers that prevent new workers from entering licensed occupations. As a result, licensing laws increase prices for consumers and shift income away from younger workers.

Licensing laws may also be contributing to the decline in entrepreneurialism among millennials. An analysis from the Goldwater Institute, for example, found that states with more licensing laws had lower rates of low-income entrepreneurship. Only 4 percent of millennials reported as being self-employed at age 30 compared to 5.4 percent of Gen-Xers and 6.7 percent of baby boomers at the same age.

As noted in a White House report during the Obama administration, licensed workers are more likely to be self-employed than non-licensed workers. Restricting entry into entrepreneurial occupations through licensing requirements slows job growth and makes it harder for young people to climb the income ladder.

Faced with the consequences of overregulation, we must choose between scaling back the role of government or doubling down on heavy-handed interventions. It is understandable that millennials and Gen-Zers would be tempted to embrace bigger government as a solution to our economic anxieties but greater involvement will do more harm than good. As it is, young people are already suffering under government overreach and will eventually bear the burden of our ballooning national debt and unfunded liabilities. The last thing we need is to have more income siphoned away through taxes or more jobs destroyed by legislative fiat.

Our future will not be determined by economic crises, but rather how we respond to them. Millennials must recognize that from high housing prices to limited employment opportunities, government is the cause of, not the solution to, the challenges we face.

The post Housing Regulations and Occupational Licensing Are Hurting Millennials appeared first on Reason Foundation.

In response to concerns that COVID-19 would result in health care shortages, some states wisely suspended licensing regulations that prevent doctors and nurses from working across state lines. But licensing laws aren’t just a barrier for health care workers. From barbers to athletic trainers to auctioneers, nearly one-quarter of workers in the United States are now required to have a license to work.

An occupational license is essentially a government-issued permission slip to enter into certain occupations. Licensing requirements typically include mandated training, education, fees, and exams––each of which adds to the burden of obtaining licensure. Requirements also vary widely from state to state, which often makes it difficult for licensed workers to relocate.

By shutting out potential competition from entering the market, burdensome licensing requirements generate higher wages for licensed workers. The estimated hourly wage premium associated with licensure is between 5 percent and 8 percent, after controlling for other relevant factors.

While higher wages might sound like a good outcome, they come at the cost of higher prices for consumers and lost employment opportunities for other workers. An analysis from the Institute for Justice found that licensing laws cost the national economy upwards of 1.8 million jobs, $6.2 billion in lost output, and $183.9 billion in misallocated resources annually. Amid the growing economic turmoil, lawmakers should do away with these unnecessary restrictions to maximize flexibility in the labor market.

Lawmakers can also reduce barriers to employment by recognizing licenses issued in other states. Last year, Arizona became the first state to pass universal license recognition for out-of-state workers relocating to Arizona. Since then, Montana, New Jersey, and Pennsylvania have passed similar reforms. At least seven other states are currently considering legislation to allow universal license recognition.

Most universal licensing policies include provisions that allow state licensing boards to only recognize licenses from states with requirements that are “substantively similar” to their own. In effect, these provisions require training and education requirements to be the same or greater in the state where a worker obtained their original license. States can maximize the impact of universal recognition policies by minimizing their own requirements or by recognizing out-of-state licenses regardless of the requirements in those states.

Moreover, many occupations are not licensed in every state, but universal recognition policies don’t allow workers from non-licensing states to obtain licensure. In other words, someone who has worked as an optician in Texas for 10 years couldn’t easily relocate to Arizona because Texas does not license opticians, but Arizona does. Lawmakers should also consider eliminating unnecessary licenses or granting licensure to workers from other states if they have worked in an occupation for a minimum number of years.

The pandemic and statewide shutdowns to combat the spread of COVID-19 are having devastating consequences for workers and businesses across the country. The long-term economic fallout could be exacerbated by regulatory barriers to employment. Occupational licensing reform is one way that states can help more Americans get back to work.

The post Occupational Licensing Reform Could Help Boost Economy As We Fight COVID-19 appeared first on Reason Foundation.

Health Care

The rapid spread of COVID-19 is overwhelming health care systems across the world. In the United States, anti-competitive regulations are exacerbating the problem by slowing testing, limiting the expansion of hospital capacities, inhibiting the use of telemedicine, and preventing medical professionals from practicing to the full extent of their training.

Certificate of need (CON), for example, laws require health care facilities to receive permission before expanding their capacities or providing new services. The lengthy and burdensome approval process is preventing hospitals from quickly adding additional beds to care for COVID-19 patients.

Several states have repealed their certificate of need laws in recent years, but 35 states still require permission to expand health care facilities. In response to COVID-19, states including New York, North Carolina, Virginia, Connecticut, and Michigan are moving to temporarily suspend their CON laws. Ample research suggests that CON laws increase costs and reduce access to care by limiting competition and supply—even outside of health care emergencies like COVID-19. States should seriously consider permanently repealing these laws to ensure adequate access to affordable care after the crisis has passed.

Telemedicine could help reduce the spread of coronavirus by allowing patients to interact with health care professionals remotely. Unfortunately, unnecessary regulations prevent telemedicine from reaching its full potential. For example, while telemedicine makes it possible to connect patients to professionals across vast distances, state-level licensing laws often prevent patients from seeking care across state lines. However, several states have taken temporary measures to allow out-of-state physicians to practice telemedicine without seeking an additional license. Enacting these reforms permanently would improve access to care and help mitigate the looming shortage of physicians.

Similarly, scope of practice laws set by states determine the range of services medical professionals are permitted to provide. In many states, these laws prevent advanced practice registered nurses (APRNs), physician assistants, and pharmacists from practicing to the full extent of their training. For example, scope of practice laws may prevent APRNs from prescribing medication or require that they work under the supervision of physicians. In response to COVID-19, states including New York and Arizona are loosening these requirements. These measures should improve access to care and allow physicians to focus on the patients in greatest need. Permanently expanding the scope of non-physician health care workers, as many states have done in recent years, would continue to improve health care access after the virus subsides.

Business and Labor

The COVID-19 pandemic is resulting in unprecedented economic shutdowns across the globe. In the US, there were a record-shattering 3,283,000 new jobless claims during the week ending on March 21. In an effort to support workers and small businesses, states are rolling back regulations that limit their flexibility during the crisis.

Restaurants and bars are among the hardest hit by government-issued stay-at-home orders and mandatory business closures. Most states have issued orders forbidding restaurants from providing dine-in service but are still allowing delivery and take-out orders. However, state and local regulations restrict the to-go sale of alcoholic beverages. Several states and cities, including the state of New York, Texas, and Los Angeles are now suspending enforcement of these regulations. While these temporary waivers will help support restaurants, they won’t do much to help bars and breweries because most require food to be part of the order. Going forward, state and local lawmakers should consider permanently eliminating these regulations. If alcoholic beverages are served in sealed containers, there is no clear justification for prohibiting take-out or delivery.

States have also encouraged people to work from home if they are able, but regulatory hurdles can make it difficult to operate a business from home. As R Street’s Shoshana Weissmann and Jarrett Dieterle detailed in The Wall Street Journal, in recent years local governments have cracked down on a man operating a recording studio from his garage, refused to permit an at-home yoga instructor, and even shut down a video game blogger for uploading YouTube videos from his house. It shouldn’t take a pandemic to realize regulation and permitting requirements for home businesses like these impedes entrepreneurial activity. Eliminating these unnecessary barriers would lend greater flexibility to workers and small businesses and could aid economic recovery after the crisis.

Miscellaneous

A host of other state and federal regulations are being suspended to limit the spread of COVID-19 and ensure an adequate supply of essential goods.

At the federal level, the Transportation Security Administration (TSA) is currently allowing airline passengers to carry one container of hand sanitizer up to 12 ounces, which is more than three times the usual limit of just 3.4 ounces.

For example, Texas is allowing alcohol delivery trucks to also carry groceries to help keep shelves stocked. “Suspending these state trucking regulations will improve our ability to deliver the necessary supplies throughout the state so that grocers and retailers are able to continually stock their shelves,” said Gov. Greg Abbott. “This is yet another example of the private sector stepping up and Texans helping Texans as we all work to mitigate the impact of COVID-19 in our state.”

It’s not just the private sector stepping up, it is also another example of an unnecessary law that should be eliminated permanently, not simply suspended. There’s no reason for Texas to go back to banning trucks that deliver alcohol from also delivering grocery supplies.

Amid concerns that reusable shopping bags could contribute to the spread of COVID-19, governments are rolling back bans on single-use plastic bags. While the impact of these measures is still an open question, plastic bag bans are bad policy outside of the pandemic. Plastic bags are actually often reused and make up a relatively small percentage of plastic litter. Ultimately, consumers should choose whether or not they use plastic bags.

North Dakota Gov. Doug Burgum wisely issued an executive order instructing all state agencies, elected officials, and offices within the executive branch to identify any rules or regulations that could complicate the state’s response. Other states should follow North Dakota’s lead and seek to identify any regulations that are causing undue harm during the crisis.

Suspending these burdensome regulations during the COVID-19 pandemic is a good idea, but many of these regulations impose costs beyond just complicating the response to the coronavirus crisis. Lawmakers should consider those costs and question whether these regulations are necessary at all.

The post Rolling Back Regulations to Combat COVID-19 Should Be Just the Start appeared first on Reason Foundation.

In a recent policy brief published by the James Madison Institute, my coauthor, Sal Nuzzo, and I discuss several state-level policy measures to address provider shortages, expand access to care, and lower costs for patients. 

The U.S. Department of Health and Human Services has already designated 282 primary care Health Provider Shortage Areas (HPSAs) in Florida, which cover a population of more than six million Floridians. An estimated 1,636 additional primary care physicians are required to remove existing HPSA designations. The shortage is projected to grow to over 3,000 physicians by 2025 and up to 4,671 physicians by 2030. 

States are beginning to embrace telemedicine as a tool to address the looming physician shortage. Indeed, telemedicine is one of many emerging trends in health care delivery with tremendous potential to expand access and achieve cost-reductions, but it should not be perceived as a panacea for issues in the health care industry. Addressing the growing physician shortage will require states, including Florida, to expand the scope of practice for non-physician providers, pursue comprehensive licensing reform, eliminate certificate of need requirements, and embrace future technological innovation.

Expanding Scope of Practice for Non-Physician Practitioners

In contrast to physicians, the supply of non-physician providers including advanced practice registered nurses (APRNs), physician assistants (PAs), and pharmaceutical workers is growing rapidly. However, scope of practice laws prevent these workers from practicing to the full extent of their training and education by limiting the range of services they are allowed to provide or requiring them to work under the supervision of physicians.  

Fortunately, wide variation in scope of practice laws and supervision requirements across states suggests that there is ample room for reform without compromising the quality of care. In fact, the vast majority of research on the subject suggests that expanding the role of non-physician providers improves access with no negative effects on quality.

A report from the Institute of Medicine strongly recommended expanding the role of APRNs to meet the growing need for primary care providers. The report specifically cited the importance of nurses in expanding access and improving the quality of care.

The Florida legislature is currently considering legislation (HB 607) that would allow APRNs and PAs to practice independently and expand their scope of practice by authorizing them to sign documents that otherwise require the signature of a physician. Another bill (HB 389) under consideration would expand pharmacists’ scope of practice to include testing and initiation of treatment for influenza and streptococcal pharyngitis.

Removing Barriers for Out-of-State Telehealth Providers

The terms telehealth and telemedicine broadly refer to the delivery of health care services via telecommunication or digital communication technologies. Widespread adoption of these technologies would help address physician shortages by allowing patients to receive care without the physical presence of a health care provider. However, the patchwork of licensing requirements for out-of-state providers limits the potential impact of telemedicine.

In 2019, Florida lawmakers passed significant reforms to allow for wider use of telemedicine. The legislation created a registration process that allows out-of-state providers to provide telehealth services in Florida without obtaining a license in the state. While allowing providers licensed in other states to practice telemedicine is a major step in the right direction, registration still presents an unnecessary barrier to out-of-state providers. 

Rather than create new requirements, Florida and other states could join interstate licensure compacts to reduce the burden of receiving licensure in multiple states. If a practitioner receives a license in any member state, they are able to receive licensure in all other member states with little or no additional effort. However, there are no existing compacts for physician assistants or pharmacists, and the compacts that do exist rely on widespread adoption to be effective. 

Alternatively, states could recognize licenses from other states. Such a policy would not be detrimental to the quality of services as licensure standards for health care providers are largely comparable across states. In fact, many states, including Florida, already have license reciprocity programs to recognize out-of-state licenses held by veterans, active-duty service members, and military spouses. Expanding out-of-state license recognition to all new residents and out-of-state providers would increase competition, expand access, reduce costs, and promote the adoption of telemedicine by expanding the health care labor market. 

Eliminating Certificate of Need Requirements and Bans on Specialty Hospitals

Certificate of need (CON) laws require health care providers to demonstrate an unmet need before constructing new facilities, expanding existing ones, or offering new services. The 1974 National Health Planning and Resources Development Act mandated states to implement CON programs for many facilities and services under the theory that unregulated competition would lead to over-investment in facilities and equipment. However, ample research has found that CON laws actually increase costs and reduce access to care by limiting competition and supply. Consequently, several states have eliminated their CON programs following the repeal of the federal mandate in 1987.  

Florida repealed most of its CON laws in 2019 but maintained requirements for nursing homes, skilled nursing facilities, hospice programs, and intermediate care facilities for the developmentally disabled. The legislature also stopped shy of eliminating Florida’s ban on specialty hospitals that restrict their services to cardiac, orthopedic, surgical or oncology care. Florida lawmakers are currently considering legislation (HB 6059) that would eliminate this ban. 

Considering that a shortage of physicians will raise costs and limit access to care, policies such as certificate of need laws that unnecessarily exacerbate these problems should be eliminated. CON laws for nursing homes and hospices are particularly detrimental in Florida given the relatively high elderly population in the state. 

Embracing Innovative Technologies

Technological innovation has the potential to transform the health care industry and reduce the impact of physician shortages, but our laws are often slow to respond to change. While it is impossible to know what innovations lie around the corner, technologies including artificial intelligence (AI), unmanned aerial vehicles (UAVs), and telepharmacy services are already demonstrating their potential. Rather than trying to force compliance with outdated regulatory schemes, states should embrace these technologies and avoid limiting future innovation through excessive regulation. 

A growing body of evidence suggests that artificial intelligence could be used to diagnose a variety of diseases more accurately than physicians. For example, an algorithm developed by Google researchers outperformed six radiologists at screening for lung cancer in a study published by Nature Medicine. While this technology is a long way off from replacing physicians, it could become an essential aid to physicians in the near future. States should be cautious to avoid limiting the potential of AI in health care settings through overregulation. 

UAVs, or drones, could be useful for delivering medical supplies to remote areas, especially during natural disasters. In fact, they are already being used in some developing countries to deliver blood, vaccines, and other life-saving medical supplies. However, deploying UAVs in the United States is more complicated because of the patchwork of laws and regulations governing airspace and will likely require collaboration between federal, state, and local authorities. Nevertheless, states like Florida should be leaders in coordinating with federal and municipal authorities. 

Telepharmacy technologies could expand access to care, particularly in rural communities, by allowing patients to interact with pharmacists remotely. There are several types of telepharmacy services including remote consultation, remote dispensing, and automated dispensing machines. In a remote counseling setting, a pharmacist provides guidance to patients via a video or audio link to ensure the safe and proper use of medications. Remote dispensing is another option, wherein a pharmacist manages several remote sites staffed by pharmacy technicians. This model allows for wider access in rural areas where traditional pharmacies staffed by in-person pharmacists may not be feasible. Finally, automated pharmacy dispensing machines, allow pharmacists to interact with patients and remotely dispense medications via video or audio link. The machines are typically stocked with common prescriptions (non-narcotics) and provide 24-hour access to pharmacy services without significant labor costs. The Florida legislature is considering legislation (HB 57) that would allow certain hospitals to place these machines in their emergency departments for use by patients upon discharge.  

As the country’s population continues to grow and age, the demand for health care services will outpace the supply of physicians. States can address the looming shortage by pursuing a broad range of reforms to expand scope of practice for non-physician providers, eliminate certificate of need laws, recognize out-of-state licenses, and embrace future technological innovations. Taken together, these measures would alleviate the growing strain on our health care resources, expand access to care, and reduce costs for patients. 

The post How State-Level Reforms Could Alleviate the Looming Physician Shortage appeared first on Reason Foundation.

Rapid growth, particularly among the elderly population, is expected to significantly strain the existing physician workforce. In fact, Florida could need as many as 4,671 additional primary care physicians by 2030 to meet the demands of its growing population.

Non-physician providers like advanced practice registered nurses (APRNs), physician assistants (PAs), and pharmacists could alleviate the state’s potential physician shortage, but anti-competitive scope of practice laws and supervision requirements limit their ability to practice to the full extent of their training and education. 

The Florida legislature is currently considering legislation (HB 607) that would allow APRNs and PAs to practice independently and expand their scope of practice by authorizing them to sign documents otherwise requiring the signature of a physician. Another bill (HB 389) under consideration would expand pharmacists’ scope of practice to include testing and initiation of treatment for influenza and streptococcal pharyngitis. 

Advanced Practice Registered Nurses (APRNs)

Advanced practice registered nurses are registered nurses who receive advanced training through graduate-level programs. The maximum range of services an APRN may perform— referred to as their scope of practice— is defined in statute. Florida law also requires all APRNs to work under collaborative practice agreements with supervising physicians. Collaborative practice agreements outline the duties of an APRN, which may be more limited than the maximum scope of practice permitted by state law. For example, a supervising physician may limit the types of medication an APRN is allowed to prescribe. 

There are generally four categories of APRNs: nurse practitioners, certified registered nurse anesthetists, certified nurse midwives, and clinical nurse specialists. 

Nurse practitioners (NPs) are a subset of APRNs who, depending on the state in which they practice, are able to provide many of the same services as physicians. A report from the former congressional Office of Technology Assessment concluded that NPs could perform a substantial proportion of tasks normally provided by primary care physicians and “as much as 75 percent of the well-person care for both adults and children.”

Twenty-four states allow full independent practice for nurse practitioners without the supervision of a physician. NPs in these states often play an important role in rural communities, which may be without adequate access to physician offices. A recent report from the U.S. Department of Health and Human Services indicated that Florida has 182 primary care Health Professional Shortage Areas (HPSAs) covering more than six million Floridians. HPSAs are geographic areas, populations, and facilities in which the need for care exceeds the supply of care providers. Allowing nurse practitioners to practice independently could expand access to care in these communities. 

Certified registered nurse anesthetists (CNRAs) work with surgeons, anesthesiologists, and other health care professionals to administer anesthesia and provide care to patients before, during, and after medical procedures. Federal law requires that CNRAs work under the supervision of physicians, but a rule promulgated by the Centers for Medicare and Medicare Services in 2001 allows states to opt-out of this requirement. Since then, 17 states have opted to allow CNRAs to practice without supervision. Moreover, research suggests that the odds of a complication occurring are virtually the same regardless of whether anesthesia is provided by a physician, CRNA, or in collaboration between the two. With more than 15 percent of physician anesthesiologists planning to retire in the coming years, Florida should allow independent practice for certified registered nurse anesthetists to ensure adequate access to anesthesia-related care. 

Certified nurse midwives (CNMs) provide care to women, including gynecological exams, family planning services, and prenatal care. They may also act as primary care providers to women and newborns. While CNMs are sufficiently trained to care for patients before, during and after delivery without supervision, Florida does not allow them to practice independently. Meanwhile, 24 states and the District of Columbia allow CNMs to practice without supervision with no negative impact on patient outcomes. 

Clinical nurse specialists (CNSs) play a unique role in the health care system. While they are capable of providing direct patient care, they often also take on leadership positions advising fellow nursing staff and identifying strategies to improve practices. Research on clinical nurse specialists is limited, but the broader literature on APRNs as a whole suggests that eliminating supervision requirements in Florida would expand access to care without compromising quality. 

Physician Assistants (PAs)

Physician assistants (PAs) are trained through graduate-level programs modeled after traditional medical school curriculums. PAs generally work under the supervision of physicians, but supervision requirements, scope of practice laws, and prescriptive authority vary across states. In 47 states, including Florida, scope of practice for PAs is determined through collaborative practice agreements with supervising physicians rather than being defined by law. Florida is also among the 44 states that allow PAs to prescribe schedule II-V medications. However, Florida’s supervision requirements are more restrictive than many other states. Physicians in Florida may only supervise a maximum of four PAs at any one time. Meanwhile, eight other states allow physicians to supervise more than four PAs, and 12 states place no limits on the number of PAs a physician may supervise. Allowing physicians to supervise more physician assistants or eliminating limits altogether would help ensure adequate access to care, particularly in light of the looming physician shortage in Florida.

Pharmacists 

Pharmacists primarily dispense prescription medications and provide guidance on their safe use. All 50 states also allow pharmacists to administer immunizations, but state laws vary widely in terms of which vaccines may be administered, requirements for physician oversight, and the minimum age at which a patient may receive vaccines from a pharmacist. Nonetheless, pharmacy-based immunization is common practice. According to the National Community Pharmacists Association, 76 percent of community pharmacies provide flu immunizations and 69 percent provide non-flu immunizations.

While Florida requires a written protocol between pharmacists and supervising physicians for all immunizations, 17 states allow pharmacists to independently administer select vaccines without protocols or physician-issued prescriptions.

In addition to providing immunizations, pharmacists may also administer tests and initiate treatment for certain conditions such as influenza and streptococcal pharyngitis. Currently, 18 states allow pharmacists to administer tests and, if the result of a test is positive, to prescribe treatment under collaborative practice agreements with supervising physicians. In eight other states, pharmacists may administer tests, but patients must be referred to a physician for treatment. Florida does not allow for testing or treatment by pharmacists. Considering that nearly 90 percent of Americans live within five miles of a community pharmacy, expanding the scope of practice for pharmacists in Florida would significantly expand access to care. 

Florida’s growing, aging population will soon outpace the supply of physicians. Expanding the role of non-physician providers including advanced practice registered nurses, physician assistants, and pharmacists through comprehensive scope of practice reform would help ensure adequate access to health care. 

The post Scope of Practice Reforms Could Alleviate Physician Shortages in Florida appeared first on Reason Foundation.

Access to gainful employment is essential to the economic success of Floridians and their families. An estimated 13.6 percent of people in Florida live below the poverty line, but the poverty rate is much lower among those who are able to find employment. In fact, just 5.1 percent of workers and 2.2 percent of full-time, year-round workers live below the poverty line, compared to 11.8 percent of all Americans.

Nevertheless, state-level occupational licensing policies make it harder for people to find work by blocking entry into many lower- and middle-income jobs. An occupational license is essentially a government-issued stamp of approval to enter licensed occupations including barber, athletic trainer, or pest control applicator. Typical requirements to obtain a license include fees, training, and examinations––each of which adds to the burden of securing employment.

In the early 1950s, less than five percent of workers in the U.S. were required to hold a state-issued license. Today, that figure has climbed to nearly 23 percent of full-time workers. A White House report from the Obama administration found that the vast majority of this growth––roughly two-thirds––is attributable to an increase in the number of occupations requiring licensure rather than changes in workforce composition. While licensing was originally intended to protect public health and safety, the same report found little evidence to suggest licensing improves quality. Moreover, many occupations that are licensed today do not present a clear threat to consumers. For example, Florida is one of only three states that license interior designers to work in commercial settings.

Licensing policies aren’t just unnecessary; they also impose considerable costs on workers and consumers. A recent report estimated that occupational licensing costs Florida approximately 129,254 jobs and between $459.9 million and $11.5 billion in deadweight loss and misallocated resources annually.

While deadweight loss refers to lost output, misallocated resources account for resources directed away from their most valuable uses which more accurately reflect the economic costs of licensing. Fortunately, a wide variation in licensing policies across states suggests that there is ample room for reform. An analysis of state licensing laws by the Institute for Justice found that Florida has the 5th most burdensome licensing laws for lower- and middle-income occupations. On average, licensure in Florida requires $318 in fees and 693 days (days lost) of education and experience compared to the national average of $267 and one year. While $318 might seem reasonable, it is more than three times the weekly grocery bill for an average Tampa household.

This report shows Florida could remove barriers to employment by eliminating unnecessary licenses and reducing the requirements for widely licensed occupations.

How Occupational Licensing Hurts Florida’s Most Vulnerable

The post How Occupational Licensing Hurts Florida’s Most Vulnerable appeared first on Reason Foundation.

As Florida’s population ages, so too will its doctors. More than one-third of active physicians in the state are over the age of 60 and will begin to retire in the coming years. Expanding the role of non-physician health care providers through occupational licensing and scope of practice reform offers one solution to the growing shortage.

Licensure of non-physician health care workers might seem like a reasonable form of regulation in the interest of public safety, but the variation in licensing requirements across states indicates that there is room for reform. Depending on state policies, they are capable of practicing autonomously and serve particularly important roles in rural areas where access to medical care is often limited. However, regulations in Florida restrict the autonomy and range of services these practitioners can provide.

Dental Health Providers 

Dentists typically lead a team of oral care providers including dental assistants and dental hygienists. There are about 51 dentists for every 100,000 Floridians, compared to the national average of 61 dentists. Increasing the autonomy of non-dentist team members could help expand access directly through independent practice and indirectly by freeing dentists to focus on the most complex procedures.

Dental hygienists are licensed at the state level and are trained through accredited dental hygiene programs. In Florida, dental hygienists have direct access, which means they are permitted to perform some procedures without the physical presence, prior examination or authorization of a dentist.

However, dental hygienists in Florida do not have prescriptive authority while Oregon, New Mexico, Colorado, and Maine allow dental hygienists to prescribe certain fluoride treatments.

Dental therapists, a relatively new category of dental care providers, could further reduce the strain on dentists. They are mid-level dental practitioners capable of performing several services previously reserved for dentists.

Beginning with Alaska in 2005, 12 states have recognized dental therapists through licensing reform with at least eight others, including Florida, considering similar reforms. Multiple studies suggest that dental therapists could contribute to reduced wait and travel times for patients, cost savings, increased productivity and improved patient satisfaction.

Nurse Practitioners 

Nurse practitioners (NPs) are registered nurses who undergo additional education and training through graduate-level programs. A report from the Office of Technology Assessment indicated that NPs could perform a substantial proportion of tasks normally provided by primary care physicians and “as much as 75 percent of the well-person care for both adults and children.”

However, state-level regulations limit the autonomy of NPs by restricting their practice authority and prescriptive authority. According to the American Association of Nurse Practitioners, Florida is among the 12 most restrictive states. NPs in Florida must have a career-long supervision agreement with a physician that outlines the services they are allowed to provide and procedures for consultation with the physician. Moreover, Florida law only permits nurse practitioners to prescribe certain controlled substances in limited quantities under the supervision of a physician. About half of US states offer NPs greater independence and prescriptive authority than Florida.

Proponents of full practice authority for advanced practice nurses include the National Academies of Medicine and AARP. Research suggests that less restrictive scope of practice laws improve health care access without posing risks to public safety. For example, a study published in the Journal of Law and Economics found that more restrictive scope of practice policies resulted in 3 percent to 16 percent higher costs for well-child visits, but with no difference in quality or safety.

Physician Assistants 

Like nurse practitioners, physician assistants (PAs) are required to participate in approved graduate-level programs to receive licensure from state boards. PA programs are modeled after traditional medical school curriculums and prepare PAs to perform many of the same functions as physicians. By definition, PAs work under the supervision of physicians, but their degree of autonomy varies widely across states depending on supervision requirements, prescriptive authority and scope of practice laws.

In Florida and 21 other states, supervision requirements are determined by state licensing boards or law. The remaining 28 states offer more flexibility by allowing physicians and PAs to determine supervision conditions at the practice level. Florida also limits the number of PAs that can work under the supervision of an individual physician. Fourteen other states place no limit on the number of PAs a physician can supervise.

Allowing more flexibility for physician assistants could increase access to care and reduce costs. A study from the Mercatus Center found that less restrictive scope of practice laws for PAs reduced the cost of outpatient services to Medicaid recipients by 11.8-14.4 percent.

As Florida’s population continues to age, adequate access to medical care will be increasingly difficult to achieve without expanding the role of non-physician health care providers. Dental hygienists, dental therapists, nurse practitioners and physician assistants are capable of performing many of the same procedures as dentists and physicians, but state-level regulation prevents them from practicing the full extent of their education and training. Occupational licensing and scope of practice reform would expand access to health care and lower costs by allowing physicians and dentists to use their time most efficiently.

This column originally appeared in the Business Observer.

The post Licensing Reform Could Expand Health Care Access and Reduce Costs appeared first on Reason Foundation.

Over the past several decades, state-level occupational licensing expanded dramatically across the county. In the early 1950s, just 5 percent of workers required a license compared to more than 20 percent of workers in 2018. Occupational licensing originated as a means for quality control in professions that potentially pose serious risks to public health. Over time, however, organized interests lobbied for licensure of more and more obscure occupations and increasingly onerous requirements to obtain a license. The practical effect has been to protect licensed practitioners from competition and inflate wages in licensed occupations without improving quality.

There is a growing movement to roll back excessive licensing policies, but much of the discussion has focused on minor industries and occupations. While widely licensed occupations including cosmetologists, landscape contractors, and travel guides demonstrate the superfluous nature of licensing, they make up relatively small shares of licensed workers and total employment. Health care workers, on the other hand, comprise 12 percent of total employment and one-fourth of all licensed workers. 

Licensure of health care workers may seem like a reasonable form of regulation in the interest of public safety, but the variation in licensing requirements across states indicates that there is room for reform. For example, 22 states license opticians, with their required training ranging from none in California to over three years in Nevada. Just nine states license dental assistants, but Minnesota requires more than a year of training, the passing of three exams, and paying $681 in fees to earn a license. 

Non-physician health care providers including dental hygienists, dental therapists, registered nurses, and physician assistants in all 50 states are either nationally certified, licensed by state boards, or both. Depending on state policies, they are capable of practicing autonomously and serve particularly important roles in rural areas where access to medical care is often limited. However, supervision requirements and scope of practice laws restrict the autonomy and range of services these practitioners can provide.  States frequently use scope of practice laws to limit the things that nurses, physician assistants, and other health care workers are allowed to do on the job. Changes these rules imposed on key health care positions could significantly increase access to care and lower costs. 

Dental Health Providers 

Dental hygienists assist dentists in providing care to patients but are able to perform a broader range of services than dental assistants. Beyond licensing requirements, the primary restrictions faced by dental hygienists are direct access and prescriptive authority. According to the American Dental Hygienists Association, “Direct Access refers to the ability of a dental hygienist to initiate treatment based on their assessment of a patient’s needs without the specific authorization of a dentist, treat the patient without the presence of a dentist, and maintain a provider-patient relationship.” 

Some states do not allow direct access for dental hygienists. Others require supervision by dentists or have minimum education and experience requirements. Only Florida, Maine, Kentucky, Wisconsin, Colorado, and Nevada do not require supervision. Most states do not grant prescriptive authority to dental hygienists. 

Dental therapists are a relatively new category of dental care providers. They are mid-level dental practitioners capable of performing several services previously reserved for dentists. Beginning with Alaska in 2005, eight states have recognized dental therapists through licensing reform. At least a dozen others are considering similar reforms to allow for greater access to dental care. Early analyses of the impacts of dental therapists show impressive results. Since 2005, dental therapists have expanded access to over 45,000 Native Alaskans living in rural areas.  

Advanced Practice Registered Nurses 

All Registered Nurses (RNs) are required to participate in state board approved programs to receive licensure. These programs include associates, bachelors, or hospital-based diploma programs. Advanced practice registered nurses (APRNs) undergo additional education and training through graduate-level programs. Broadly, APRNs are granted additional oversight responsibilities and are more specialized than registered nurses (RNs). Nurse practitioners (NPs) are a subset of APRNs who, depending on the state in which they practice, are able to provide many of the same services as physicians. 

NPs possess the training and expertise necessary to assess patients, make diagnoses, and devise treatment plans. A report from the former congressional Office of Technology Assessment indicated that NPs could perform a substantial proportion of tasks normally provided by primary care physicians and “as much as 75 percent of the well-person care for both adults and children” However, state-level regulations limit the autonomy of NPs by restricting practice authority and prescriptive authority. 

Under full practice authority, NPs are allowed to practice to the full extent of their training without supervision by a physician. About half of the states require NPs to have an agreement with a physician which outlines the services they are allowed to provide and procedures for consultation with the physician. Some states allow NPs to practice independently after completing a transition to practice period. Only 11 states allow for full independent practice with no physician oversight.

Nurse practitioners face similar restrictions on prescriptive authority. Twenty-five states require career-long relationships with physicians to prescribe medications. Independent prescription authority is allowed after a transition period in five states, while the remaining 20 states allow full independent prescriptive authority. 

Proponents of full practice authority for APRNs include the National Academies of Medicine and AARP. Research suggests that less restrictive scope of practice laws improve health care access without posing risks to public safety. For example, a study published in the Journal of Law and Economics found that more restrictive scope of practice policies resulted in higher costs of three to 16 percent for well-child visits with no difference in quality or safety.  

Physician Assistants 

Like APRNs, physician assistants (PAs) are required to participate in approved graduate-level programs to receive licensure from state boards. PA programs are modeled after traditional medical school curriculums and prepare PAs to perform many of the same functions as physicians. By definition, PAs work under the supervision of physicians, but their degree of autonomy varies widely across states depending on supervision requirements, prescriptive authority, and scope of practice laws. 

In 22 states, supervision requirements are set by law or determined by state licensing boards. The remaining 28 states offer more flexibility by allowing physicians and PAs to determine supervision conditions at the practice level. The vast majority of states allow prescriptive authority and scope of practice to be determined by supervising physicians at the practice level. However, most states restrict PAs in at least one aspect. 

Allowing more flexibility for PAs could increase access to care and reduce costs. A study from the Mercatus Center found that less restrictive scope of practice laws for PAs reduced the cost of outpatient services to Medicaid recipients by between 11.8 and 14.4 percent. 

As the population continues to age, adequate access to medical care will be increasingly difficult to achieve without expanding the role of non-physician health care providers. Dental hygienists, dental therapists, nurse practitioners, and physician assistants are capable of performing many of the same procedures as dentists and physicians, but state-level regulation often prevents them from practicing the full extent of their education and training. Occupational licensing and scope of practice reform would expand access to health care and lower costs by allowing physicians and dentists to use their time more efficiently. 

The post Scope of Practice Laws and Licensing Regulations Increase Health Care Costs For Patients appeared first on Reason Foundation.

Meanwhile, nearly one-third of the adult working-age population has a criminal record. A recent survey from Adecco USA found that firms are loosening hiring requirements and increasingly considering applicants with criminal records. The survey found, “Today, 35 percent of businesses are ‘likely’ or ‘extremely likely’ to hire temporary workers with past criminal convictions. Perhaps more than any data point in this report, this strongly supports the argument to loosen hiring requirements and represents a paradigm shift—a shift forced by the constricted labor market and an evolving sentiment towards what is considered a prohibited offense.”

Unfortunately, as companies look to loosen their hiring requirements, government-imposed hurdles to employment may hamper the reintegration of newly released prisoners, contributing to high recidivism rates and limiting opportunities for employers seeking workers.

The Adecco survey found that over half of respondents either already reduced or were planning on loosening hiring requirements for temporary workers. Over 20 percent said they stopped drug testing candidates and 16 percent stopped performing background checks. Another survey conducted by the Society for Human Resource Management found that just 26 percent of managers and 13 percent of human resources professionals were unwilling to hire workers with criminal records. Among the most frequently cited reasons for not hiring former offenders were “local, state, or federal regulations that make it impossible or very difficult to hire individuals with criminal records.”

According to the U.S. Bureau for Justice Statistics, 68.4 percent of prisoners are rearrested, or recidivated, in the first three years following release. Ample research has shown that access to gainful employment is among the most important factors for reintegrating former offenders back into society.

The recidivism rate for those employed in the first year following their release is 19.6 percent, compared to 32.4 percent for those without stable employment. Several states have implemented prison-based education and job training programs to reduce barriers to employment after release. These programs are important because prisoners often have less educational attainment than the general population. About 41 percent of the U.S. prison population lacks a high school diploma or GED, compared to just 18 percent of the general population.

Despite efforts to prepare prisoners for the job market, occupational licensing requirements in many states make it nearly impossible for former offenders to find work in many licensed occupations. For example, all 50 states require barbers, truck drivers, and pesticide applicators to hold state-issued licenses. These licensing policies can reduce employment opportunities for former prisoners through blanket prohibitions on the licensure of former offenders or through excessive requirements placed upon them, including minimum educational attainment, training and fees.

Several studies have linked occupational licensing policies to higher rates of recidivism across states. I recently co-authored a policy brief published by the James Madison Institute which found that states requiring higher training and fees had significantly higher recidivism rates. A similar report from the Center for the Study of Economic Liberty at Arizona State University found that “good moral character” provisions and licensing requirements were associated with higher rates of recidivism––even after controlling for changes in crime rates and labor market conditions.

The good news is, according to the Institute for Justice, 27 states have reformed their occupational licensing policies since 2015 to make it easier for former criminal offenders to find work.

A tightening labor market and an increasing willingness among employers to hire former offenders are promising developments that could go a long way toward reducing recidivism rates. States could leverage occupational licensing reform to lower crime rates and reduce correctional spending. Possible measures include reducing the discretion of licensing boards to deny applicants on the sole basis of their criminal records or reducing the training, education, and fees required to obtain a license.

The post Companies Are Loosening Hiring Requirements and Considering Job Applicants with Criminal Records appeared first on Reason Foundation.

While it may be wise to prevent someone from handling a vehicle when they have been driving drunk or causing accidents, some states have turned to license suspension as a broader form of punishment, stacking it on top of the fines and prison sentences courts already impose. Florida is among the most conspicuous members of this crowd: an estimated 76 percent of license suspensions in Florida are for non-traffic-safety related offenses.

Today, 86 percent of Americans use a car or motorcycle to get to work. Without a driver’s license, they are at risk of losing their job and their income. Many places of employment even require a valid driver’s license before hiring. These conditions have made the driver’s license an increasingly necessary tool to rise out of poverty and unemployment and cast a long shadow over the practice of punitive license suspension.

Individuals who ignore their license suspensions and risk driving often do so because they don’t have a better means of getting around. The National Highway Traffic Safety Administration estimates 75 percent of individuals with suspended licenses do take that risk and drive anyway.

In Florida, those who get caught while driving without a valid license are charged with Driving While License Suspended, Revoked, Canceled or Disqualified (DWLS). Even on a first offense, it can carry up to $500 in fines or 60 days of jail time. The potential fine doubles to $1,000 on a second offense and potential jail time increases to a year. On a third offense, Florida charges DWLS as a third-degree felony, which carries fines of up to $5,000 and a prison term of up to five years.

Any fines charged plus any prior debt must be paid for an individual’s license to be reinstated. Each time an individual is caught trying to drive with a suspended license, additional fines and fees make it harder for them to return to driving legally.

Florida regularly suspends its citizens’ driver’s licenses as a punishment for a vast array of civil and criminal offenses, with many offenses carrying a mandatory license suspension. While suspending licenses for unsafe driving has a commonsense value to the public, many of the offenses for which Florida suspends an individual’s license have no relation to traffic safety. These suspensions cut off a vital lifeline for individuals in the workforce and can herald an endless cycle of fines, court costs, and liabilities that make escaping the criminal justice system nearly impossible. Florida workers aren’t the only victims: the state itself spends man-hours and taxpayer dollars prosecuting and imprisoning individuals for the crime of ‘driving while license suspended,’ even while burdened with the tenth-largest prison system in the nation.

This policy brief explores the reasons Florida suspends driver’s licenses, the consequences of doing so, and the ways to handle these challenges moving forward.

Changing Course: Driver’s License Suspension in Florida

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niang_v_carroll_case_16-3968

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Attachments

• Occupational Licensing Florida

The post Occupational Licensing Kills Jobs appeared first on Reason Foundation.

Fewer suppliers of services drive up costs and reduce choices for consumers. In the case of taxicabs, limits on the number of drivers have been written into the law as limits on the number of vehicles each company can use.

In one prominent study, Morris M. Kleiner and Alan B. Krueger, former Chairman of President Obama’s Council of Economic Advisers, found that occupational licensing inhibits competition among practitioners. This raises wages for upper-middle class workers. Another study by Economist David Skarbek sums up the research findings more directly: “The dominant position in economics is that licensing restricts supply, increases prices, and transfers wealth from consumers to producers.” Despite these findings, governmental licensing is set to expand to ridesharing services.

Last weekend the ridesharing service uberX launched in two previously untapped markets, Las Vegas and Philadelphia. In Philadelphia, the Philadelphia Parking Authority conducted sting operations on uberX drivers. The local authorities impounded thier vehicles. Owners will have to pay over a thousand dollars to get their vehicles back from the government.

The sting operations in Las Vegas were more extreme. Officers sporting black ski masks reportedly treated one Uber driver as a suspected criminal, ordering him to get out his car and asking him if he had any drugs. Not only is this humiliating but drivers in Las Vegas could be charged up to ten thousand dollars in fines for giving people a lift. In both Philadelphia and Las Vegas, the local authorities detained drivers because they did not have special government-granted licenses.

In March, Seattle approved rules that limited the number of rideshare vehicles for each company to 150. Although the limit has now been overturned, occupational licensing schemes are prone to limiting the supply of workers.

The primary reason for rideshare drivers to be licensed by the government is to ensure safety. In fact, the same call has been made to license other occupations. The argument is that there is an asymmetry of information between rider and driver. Namely, a rider does not know about the safety qualities of the service he is about to pay for. In a similar vein, a recent Forbes article lamented on how straightforward it is to become a driver for Uber and clamored for more government involvement. The point of ridesharing is to get a steady stream of drivers out on the road without slowing down the process with unnecessary regulatory red tape.

Uber already takes safety precautions, including $1 million insurance policies for each driver, driver background checks and a customer feedback system that locks-out bad drivers. If something really goes wrong, Uber’s mobile app tracks where a passenger gets picked up, where a passenger is located during the trip and the passenger’s destination. Compare this with a cab company in the District of Columbia where riders are fortunate to be able to use a credit card instead of cash, much less track their route.

Regulators should keep the outcome of occupational licensing in mind when they’re crafting rideshare rules. Ridesharing companies provide checks on their services’ safety. The classic asymmetrical information argument doesn’t apply to ridesharing due to insurance coverage and customer feedback mechanisms. The empty gesture of licensing rideshare drivers is not worth the consequences: restricted mobility and job opportunities for Urbanites.

The post License to Kill Jobs and Choice: What Occupational Licensing Research Can Teach About Rideshare Regulations appeared first on Reason Foundation.

The Golden State has long been a sought-after destination for those who want to make it in America. A culturally diverse state with majestic forests, sunny skies and world famous beaches, California’s economy has long been one of the largest on the planet. Unfortunately, California also has one of the most extensive regulatory systems in the country, and its stratospheric tax rates are as famous as its landscape.

California’s income, sales and corporate tax rates are among the highest in the country. The Mercatus Center recently ranked California 49th in terms of economic freedom and 50th in regulatory freedom, finding that “California not only taxes and regulates its economy more than most other states, but also aggressively interferes in the personal lives of its citizens.”

Likewise, a spring 2013 report by the Kauffman Foundation, which surveyed nearly 8,000 small business owners nationwide, rated California a “D” in terms of overall business friendliness and an “F” in for its tax code and regulatory hurdles. A transportation company owner who participated in the survey described the business environment in particularly negative terms: “Too many agencies to deal with. Agencies nickel and dime you to death-the paperwork gets quite burdensome.”

This elaborate web of taxation and regulation, according to a 2009 study by researchers at California State University, Sacramento, costs the California economy approximately $492 billion. Taken together, these policies fuel a continuing high net-migration out of the state, and have contributed to a high rate of unemployment and underemployment (18.8% as of April 2013).

Among the countless regulations that restrict and restrain entrepreneurs and job seekers alike is the practice of occupational licensing. While all states require government licenses to work in certain occupations, California leads the nation in terms of how many occupations it licenses and the extensiveness of requirements to obtain licenses. Reviewing the practice of occupational licensing in California, a few issues become clear: licensing in California is arbitrary, particularly onerous, and ultimately unnecessary.

Occupational Licensing in California
The state of California, through the Department of Consumer Affairs (DCA), spends a quarter of a billion dollars annually to regulate and license over 200 occupations ranging from tree trimmers to animal trainers to doctors. Funding comes from the litany of fees and citations issued by the licensing boards, and significant portions of licensing board budgets are directed toward enforcement (e.g. audits, sting operations) of board policies. Licensing generally requires submitting fingerprints, paying various application fees, and documentation of fulfilling certain educational and/or work experience explicitly outlined by board policies. For some occupations, the educational and work requirements may take years and thousands of dollars; for others, individuals may just need to submit fingerprints and a fee.

The mission statements of California occupational licensing boards suggest that their existence is essential to the health and safety of Californians. The Contractors State License Board (CSLB), which issues 43 different licenses, claims it “protects consumers by regulating the construction industry through policies that promote the health, safety, and general welfare of the public in matters relating to construction.” Similar language is used by other licensing boards, such as the Board of Barbering and Cosmetology, which claims to “ensure the health and safety” of Californians by “enforcing the laws of the beauty industry.”

There are also Boards that apparently exist not for public safety considerations, but instead for the purposes of ensuring the “highest quality professional services,” as is the case with the Court Reporters Board of California. Whereas fewer than half of all states require licenses to be a court reporter, California mandates licensure and certification. As a requirement for the licensing examination, aspiring court reporters must be certified by or have a Certificate of Merit from the National Court Reporters Association (NCRA). The NCRA is a national, private association of professional court reports, and has been issuing certification to court reporters since 1937. In 22 states, certification from the private NCRA is accepted in place of state licensing or certification exams. States such as Colorado and Alaska don’t require any form of certification. As will become increasingly clear in this discussion, for most of the professions that California licenses through one of its occupational boards, there exist private certification associations that can and have been administering and bestowing certification and education for those who seek it.

It should be noted that none of this means that an unlicensed market necessarily entails an increased number of unqualified persons suddenly being hired. Like every other private sector job, employers have every incentive to ensure that prospective employees are qualified and that employees are doing their jobs up to their expectations.

The Arbitrariness of Licensing
Reviewing California’s licensing requirements in relation to other states reveals that there is a high degree of arbitrariness to which occupations require government permission.

A 2007 Reason Foundation study found grossly disparate numbers of occupations requiring government licenses, even among bordering states. California was found to require licenses for 177 occupations, far more than Arizona (72), Nevada (95), and Oregon (107). Of these, only 46 occupations require licenses in all four states. More than 100 of the 177 occupations California required licenses for in 2007 were licensed in fewer than half of all states. The average number of occupations licensed for all states in 2007 was 92, though states ranged from as little as 41 (Missouri) to California’s 177.

The Institute for Justice conducted a more recent review of occupational licensing in 2012, which reviewed 102 “low- and moderate-income occupations,” defined as occupations with incomes below the national average, and the nature of licensing in all 50 states and the District of Columbia. California licenses 62 of the 102 occupations reviewed by the Institute for Justice, and as “the second most broadly and onerously licensed state in the country” required an average of $300 in fees and 549 days of education and/or work experience to acquire a license.

To take an example, California is among only 15 states that license locksmiths. California law currently makes it a misdemeanor to work as a locksmith without a license, punishable by up to a year in jail and/or a $10,000 fine. California currently requires locksmiths to submit fingerprints and pay various fees. Individuals wishing to start up their own locksmith company must not only pay higher fees, but may be subjected to the extensive contractor requirements should they wish to pursue projects in excess of $500. Unlike many other occupations licensed by California, there are no training, educational or certification requirements for locksmiths. In other words, locksmiths in California really are just paying the government for permission to work.

Given that the majority of states do not require individuals to seek permission to be a locksmith, and that California’s licensing requirements aren’t even tied to experience or education, the value of locksmith licensing requirements makes little sense.

Licensing Doesn’t Equate to Better Service
A common argument in support of licensing is that licensing serves as a means of quality control. Having individuals jump through hurdles, the argument goes, ensures that only truly qualified individuals work in certain professions. The problem with this argument is that it isn’t particularly supported by evidence. While research into the impact of licensing requirements on quality of service is limited, the research that is available provides a mixed picture of how licensing requirements influence quality of service.

As summarized in Table 2 of Adam Summers’ report on occupational licensing, of the fifteen studies (fourteen American, one Canadian) conducted on this subject, only one found that licensing (of dentistry) had a positive impact on quality. Meanwhile, eight found no effect of licensing on quality, while six found a negative effect on quality. This is in part due to the restraint on competition that licensing entails. By putting more burdens on individuals and businesses, fewer people will be expected to enter an occupation requiring licensure. As a consequence of reduced competition and consumer choice, the prices of services go up.

A 1990 study of occupational licensing for the Federal Trade Commission concluded that licensing contributed “little, if any, quality enhancement” and that “consumers are not necessarily better off” if licensing does enhance quality, as licensing is associated with higher prices. In further support of this latter claim, Table 3 of Adam Summers’ report lists 15 studies (thirteen American, two Canadian) that looked into the effect of licensing on prices. Thirteen definitively found price increases associated with licensing.

These price increases have significant predictable consequences. First, while it is illegal to hire unlicensed contractors for landscaping or homebuilding, people often do so in order to save money. Turning to the black market exposes consumers to potentially harmful practices with minimal legal protections. Second, as the 1990 FTC report indicated, consumers may be more likely to attempt “do-it-yourself” jobs. Higher electrical licensing requirements, according to the report, have been correlated with higher rates of electrocution as more individuals attempt to perform their own work.

Stifling Entrepreneurship
California’s restrictive and onerous contractor licensing requirements, according to CSLB, “is part of California’s estimated annual $60 to $140 billion dollar underground economy.”

Working on a project “for which the combined value of labor, materials, and all other costs” exceeds $500 requires a contractor’s license. California law expressly forbids any attempt to break down a larger project “to smaller amounts of less than $500” in order to meet this exemption and be able to work without a contractor’s license. The CSLB licenses 300,000 contractors in California, with licensing classifications including landscaping, drywall installation, painting and roofing.

To apply for a contractor’s license, individuals must have more than $2,500 worth of operating capital (defined as assets minus liabilities), submit an application along with $300, as well as at least four years of experience. To meet this four-year requirement, individuals may take three years of schooling, followed by one year of work experience under the supervision of a CSLB-approved contractor. Once applicants meet this requirement, they must submit fingerprints for a background check. Applicants must disclose any criminal history, even if the record was sealed, expunged or reduced; failure to do this is grounds for being rejected at this stage. Applicants then must take two exams: a Law and Business examination, and an exam covering the specific classification being applied for. There are hundreds of dollars’ worth of fees throughout this process. For example, in 2012 Tree Service (tree trimmer) applicants had to pay an average of $851 in fees. Once the license is issued (at a cost of $180), contractors must abide by other requirements, such as acquiring insurances and bonds. This is just the licensing part, and speaks to no other regulations, insurances, permits and certifications they may need.

These contracting requirements place heavy burdens on occupations ranging from tree trimming (which only six states license at all) to mobile home installers (which 12 states don’t license at all). These burdens make little sense given that many states simply don’t require licensing for many of the 43 classifications that fall under the jurisdiction of the CSLB. With such extensive standards, individuals and businesses with the means and time to meet these requirements have significant protection from competition, as many individuals may simply find themselves overwhelmed by licensing requirements.

Adding to this, there isn’t a mechanism to review whether or not the state of California needs to be issuing licenses or whether or not public safety is truly improved by CSLB policies.

California currently licenses over 100,000 “General Building Contractors.” Approximately a dozen states, including Texas, Colorado, and Illinois, do not require a state-issued license for general contractors. There is no evidence one way or another indicating that licensing requirements have improved quality in the general contracting profession or that consumers are protected by the requirements. As an indirect measure, the 2010 sunset review report of the CSLB, which never addresses whether or not consumers are actually protected or if the quality of the industry improved by its existence, provided the number of complaints it received between 2006 and 2010. When examining how many complaints the CSLB received regarding competence, unprofessional conduct, fraud, personal conduct, and health and safety, it appears that the CSLB isn’t particularly protecting consumers. Between 2006 and 2010, overall complaints from these categories went from 13,206 to 12,979; with increases in complaints pertaining to unprofessional conduct, fraud, health and safety, and personal conduct in that time period.

Criminalization of Economic Activity
A persistent argument in favor of licensing is that the oversight provided by government licensing boards protects consumers from scammers and criminals in general. This ignores the reality that fraud and violations of contracts are already against the law. Enforcing existing laws would more than suffice in protecting consumers from those who wish to do them harm.

Like other prohibitions, laws prohibiting working in certain occupations without government permission have served only to criminalize large numbers of people who choose to work unlicensed. A 2007 San Francisco news station review of locksmiths in the city phone directory revealed that only 7% of the locksmiths were licensed. While California lawmakers interpreted this as evidence that larger fines were necessary, these numbers also reveal how many people are willing to ignore licensing requirements, perhaps because the burden is already too high. Effectively, such regulation unfairly forces low-income businesspeople out of the market and protects existing businesses against fair competition.

The extensive licensing requirements push many into working “under the table.” The CSLB spends a significant portion of its $50 million budget on enforcement of its licensing requirements. Tree trimmers (referred to on the CSLB website as Tree Service Contractors, classification D49) who are willing to accept projects worth more than $500 must apply for this extensive licensing, despite the fact that few states regulate this industry. The CSLB website features several press releases lauding the results of sting operations against unlicensed tree trimmers.

The CSLB enforcement investigators often go through websites like Craigslist to find unlicensed tree trimmers offering to work; the CSLB then arranges sting operations and issues Notices to Appear to answer for misdemeanor charges of working without a license and “illegal advertising.” In 2010, one sting operation netted 161 unlicensed contractors, with CSLB investigators posing as homeowners who were accepting bids for work including tree trimming, landscaping and painting. The press release referred to one “Freebie” who “showed up at the front door with a flyer” and asked, “if they had any tree trimming or landscaping they needed done.”

One 72-year old suspect caught in the sting operation is reported to have said he’d “had it with California and is moving to Florida.” Another “asked why he was called again since he’d been caught before.”

First time violators face up to six months in jail and/or a $5,000 fine; a second violation comes with a 90-day mandatory jail term.

Licensing Boards Can (And Do) Get It Wrong
Acupuncture is currently licensed in 44 states and the District of Columbia. Acupuncture in the remaining six states is a legal grey area; and four only explicitly give medical doctors, chiropractors, podiatrists and/or individuals under the direct supervision of medical doctors permission to engage in acupuncture. Two, Wyoming and North Dakota, don’t regulate acupuncture at all. A 2004 bill to license acupuncture in North Dakota failed to gain traction, as there were only three practitioners in the state, and there did not appear to be any pressing need to regulate acupuncturists. Similar efforts to license acupuncture in Wyoming have similarly failed to get anywhere, to no apparent detriment to the health and safety of consumers.

The centralization of power over granting occupational licenses puts a significant responsibility on regulators to make appropriate judgments. The California Acupuncture Board (CAB) serves as an example of how fallible government regulators can be. California is unique in regulating acupuncture in that, unlike any other state, it writes its own licensing exam and sets its own educational standards. As complicated as regulating acupuncture might be, other states have at least realized that non-governmental, private organizations can effectively set standards. The Accreditation Commission of Acupuncture and Oriental Medicine (ACAOM) is recognized as a national accrediting agency in the fields of acupuncture and oriental medicine. Whereas most states allow aspiring acupuncturists who received accreditation from an ACAOM-approved school to take state licensing exams, California does not recognize ACAOM accreditation, and sets its own acupuncture education standards. As a consequence, according to the CAB website, “California does not recognize out-of-state licensing for practice in this state.” California is the only state that issues a state-generated exam, independent of the quality controls that the national ACAOM sets. This protectionist policy makes it difficult for out-of-state acupuncturists, with nationally valid certification, to compete in California, thereby restricting consumer choice.

The CAB was created in 1999 and sunrisen until 2002, at which point the independent state oversight agency called the Little Hoover Commission (LHC) was tasked with reviewing the CAB. In 2004, the LHC came back with its findings, and noted that it was asked to review the CAB because it “too frequently acted as a venue for promoting rather than regulating” the occupation of acupuncture, and had not “adequately incorporated emerging scientific evidence into board policies, regulations, and public communications.” As a result, both the private National Guild of Acupuncture and Oriental Medicine (NGAOM) and the federal National Center for Complementary and Alternative Medicine (NCCAM) have repeatedly contacted the CAB for inappropriate standards and making inaccurate scientific claims.

A March 2012 Background Paper prepared by the Senate Committee on Business, Professions and Economic Development reported ten persistent issues that the CAB still faces. One major concern was with California’s unique examination requirement and the persistent problems with its application. For example, California issues exams twice a year in English, Chinese and Korean. Translating the exams appropriately has been an issue for the CAB. From 2007-2010, applicants using the Korean-language licensing exam had pass rates from 66%-74%. However, in an exam administered in 2011, this dropped to 30%, due to the misconception on the CAB’s part that “Korean-speaking acupuncture students were taught in Chinese” and consequently “the exam was not translated into Korean in its entirety,” with many sections in Chinese. This issue was subsequently resolved, following significant outcry, and the Korean-speaking students were able to retake the exam without charge.

Another issue raised in the background paper was the existence of dubious Continuing Education (CE) requirements, with licensees required to take courses as a condition of maintaining their license. In 2010, the NGAOM challenged the CAB for approving classes “grossly out of compliance” with CAB’s regulations. The CAB has approved courses in astrology, numerology and mysticism as fulfilling CE obligations.

As the example of the bungled effort to regulate the occupation of acupuncture in California demonstrates, tying up an occupation with government bureaucracy isn’t exactly for the best. When government institutionalizes a profession, it is not only limiting competition, but it is also centralizing standards that may not make any sense and that are in stark contrast from what the private sector finds acceptable.

Challenges to Licensing in California
In 1997, the Institute for Justice filed a legal challenge with Dr. JoAnne Cornwell (a “locktician”) against the California Board of Barbering and Cosmetology due to the Board’s unnecessary licensing of African hairstyling, which consists of “twisting, braiding, weaving, and locking natural hair fashions, mostly for African-American clients.” African hairstylers in the state were forced by the Board to submit to its licensing requirements, which included nine months of costly cosmetology classes (averaging $5,000-$7,000), none of which taught African hairstyling. In 1999, a U.S District Court judge ruled that licensing requirements for African hairstylers “failed to pass constitutional muster” and struck down licensing requirements for African hairstylers. Today, African hairstylers are able to practice their craft in California without a license. To this author’s knowledge, California consumers haven’t had their health or safety compromised as a result. Should African hairstylers engage in hair dyeing or straightening, however, they must still submit to the burdensome cosmetology licensing regulations.

Years later, California mandated that individuals operating real estate advertising websites, regardless of which state they were based out of, obtain real estate broker licenses. In 2003, the Institute for Justice filed suit against the California Department of Real Estate on behalf of two Web-based companies challenging the law, which required up to two years of education and thousands of dollars in fees. In 2004, a federal judge in Sacramento struck down the licensing requirements against real estate advertising website operators.

Despite these cases, licensing is still the norm, and apparently considered a necessary state function.

Conclusions
California’s occupational licensing needs to be reviewed from a position of common sense. First, occupational licensing in California is arbitrary. The broad differences between California, its neighbors, and the nation as a whole suggest that California is licensing far more occupations than necessary. A tree trimmer who wishes to be competitive in California must divert years of their life and significant sums of money just to get permission from California regulators to make a living, while in most states this is not the case. As important as safety is in construction jobs, the extent of California’s regulation and licensing of contractors is unparalleled in other states.

Second, occupational licensing in California has a track record of serving to limit competition by making certain occupations available only to those who can afford it. Licensing requirements in California generally require individuals to have significant amounts of money and the time to invest in state-mandated education and work experience, including in many occupations for which these standards seem excessive. These demands are exceptionally onerous when one considers that not only are many of the occupations licensed in California unlicensed in most of the country, but California also places particularly stringent conditions on job seekers without any mechanism for ensuring that such regulations are necessary.

Third, government licensing may ultimately be unnecessary. With private certification organizations such as the National Institute for Automotive Service Excellence (which certifies 350,000 mechanics), Associated Locksmiths of America (ALOA; which certifies over 2,000 locksmiths), the National Board for Certification in Occupational Therapy, the National Court Reporters Association for court reporters, and countless others, it is unclear why permission from government licensing boards is necessary for many occupations. California already has consumer protection laws, long standing laws against fraud and theft, and there is nothing about the licensing boards that gives them any special authority in upholding the law, as ultimately they just refer cases to attorneys general. Further, with organizations such as the Better Business Bureau, and websites such as Ripoff Report or Angie’s List, consumers have greater access than ever to means of determining the quality of service for virtually any service provider they seek to hire.

The idea that individuals in the United States need permission from government to work (and need to pay for the privilege) is contrary to the tradition of economic liberty on which this country was built, especially when states can’t agree on which professions need such regulating. California’s egregious occupational licensing regulations show that at the very least, an occupation-by-occupation review is a reasonable approach to reform of California’s arbitrary and protectionist occupational licensing standards. The suggestion that the state is uniquely situated to set and maintain industry-wide professional and ethical standards ignores the reality that private certification boards can and do perform this funtion, as well as the fact that standards set by employers and consumers are ultimately what matter most.

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