The case for occupational licensing reform in the next legislative session

Occupational licensing rules, such as certifications, create an entry barrier, particularly for low-income workers. For instance, it costs tens of thousands of dollars and takes months, if not years of education, to obtain a cosmetology license, which both delays and denies employment to low-income workers. Furthermore, these rules restrict supply, raising prices for consumers.

While Minnesota is generally lightly regulated, the state’s licensing burden has been growing, limiting freedom in the state. This is concerning, particularly now as low-income workers are losing jobs due to COVID-19 lockdown rules. As the state is struggling to recover jobs, licensing reform could fasten recovery, creating jobs for workers.

Licensing is ripe for reform

The Minnesota economy has only recovered 52 percent of the jobs lost during the pandemic. According to a new report by DEED, it is possible that full job recovery won’t be reached until late 2022 or early 2023. This translates to prolonged unemployment among low-income individuals.

To hasten recovery, lawmakers should consider repealing or loosening licensing laws. This would reduce entry barriers to lucrative professions, likely fuelling entrepreneurship and kickstarting state recovery.

Lawmakers should consider enacting universal license recognition as some states such as Arizona have done. This will fast-track employment, improving recovery.

In addition to universal recognition, lawmakers should also consider loosening licensing requirements for low-risk occupations, such as cosmetologists and barbers. This would make it easier for workers to enter these industries, creating jobs.