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How bad is Minnesota for occupational licensing?

I’ve recently about how occupational licenses are another example of regulations which kill economic growth and are about protecting producers, not consumers. So, what is the situation in Minnesota?

In 2012, the Institute for Justice ranked Minnesota the 46th most broadly and onerously licensed state. We licensed 34 of the 102 occupations they studied, which was fewer than most states. Our laws rank as the 29th most burdensome and require, on average, $238 in fees, 300 days of education and experience, and around two exams.

But, they went on,

Despite its better-than-average rankings, Minnesota licenses some occupations that are rarely licensed elsewhere. For example, few other states license electrical helpers (just one), packers (five), title examiners (six) or dental assistants (eight). Workers in these occupations are allowed to operate in most states without state licensure, calling into question why Minnesota deems licensure necessary. Minnesota also licenses dental assistants more stringently than the few other states that license the occupation, requiring $681 in fees, an estimated 425 days of education and three exams. By comparison, the average requirements across licensed states are just $138 in fees, 92 days of education and experience, and one exam.

Minnesota licenses dental assistants so onerously that it is easier to become an EMT than it is to become a dental assistant. EMTs must complete just 150 hours (roughly 35 days) of education, meaning that dental assistants need 12 times as much schooling. Cosmetologists and barbers also face more stringent licensing requirements than EMTs. Cosmetologists must demonstrate 10 times as much education (1,550 hours or roughly 362 days) and barbers almost 18 times as much (1,500 hours each of education and experience, equivalent to 613 days). Minnesota could reduce barriers to employment in lower-income occupations by reducing or repealing such high education and experience requirements, or—if government regulation is necessary—by replacing occupational licenses with less restrictive regulatory alternatives.

In November last year, the Institute for Justice produced a study titled ‘At What Cost? State and National Estimates of the Economic Costs of Occupational Licensing‘. It found that, with 21.8% of its workers licensed, Minnesota ranked 9th nationally. However, it also found that the economic returns from licensing in Minnesota – the amount by which licenses raised the earnings of licensed workers – were just 7.68%, a result deemed not statistically significant. The authors explain that

One might expect states that rank high on percentage of licensed workers to also have high economic returns. However, this is not necessarily the case. While higher percentages of licensed workers are driven primarily by higher numbers of licensed occupations, higher returns are driven more by higher barriers to entry. Usually, though not always, the more effort, time and money a person must invest in the process of obtaining a license, the higher economic returns will be.

This sounds like good news for Minnesota, comparatively speaking. But research from the Mercatus Center at George Mason University in 2018 looked at how these state burdens have changed. Using reports from the Institute for Justice,  the authors were able to see how the occupational licensure burden had changed across all 50 states and the District of Columbia between 2012 and 2017.

They found that Minnesota ranked 11th overall for the increase in the breadth and burden of its occupational licensing requirements between 2012 and 2017, as sen in Figure 1. The breadth and burden of Minnesota’s occupational licensing requirements has grown at nearly double the national rate of 4% in the five years covered.

Figure 1

Source: Mercatus Center at George Mason University

So, while Minnesota’s occupational licensing environment might not be as challenging as in some other states, there is room for improvement and, at the very least, the growth of recent years must be reversed.

John Phelan is an economist at the Center of the American Experiment.