Minnesota’s Economic News — W/E 10/22/21
Labor market Kare 11: Retailers ramp up hiring for the holiday shopping season KEYC: Childcare shortage impacts southern Minnesota families, economy Bemidji Pioneer: Minimum wage set to increase 2.5% as…
In a positive turn of events, the state of Florida has passed a law that makes it easier for some professionals to do their jobs. The law, which is called the occupational Freedom and Opportunity Act, effectively reduces or eliminates licensing requirements for multiple professions. This is one of the biggest licensing reforms ever undertaken by any state and it will go a long way in reducing unemployment and increasing entrepreneurship in the state.
Through the newly instated rule, the state of Florida will no longer require licenses for jobs like “interior designers, labor representatives, boxing announcers and timekeepers, hair braiders, hair wrappers, body wrappers, nail polishers and painters and makeup applicators”.
The new Act also “allows workers in some professions to easily transfer their out-of-state licenses to Florida and cuts down on the training required to receive or renew a license.”
However, this is not good news to everyone’s ears. Some industry experts are worried that the move will reduce quality and safety. This is not a surprising argument. A lot of industry experts use quality and safety as a reason to call for more regulation. But their intention is usually to reduce competition.
The idea that industry experts push for licenses as a way to limit competition is supported by the sheer lack of evidence that occupational licensing improves quality. Quite to the contrary, a lot of evidence exists showing that customers care more about ratings and prices, than they do about licensing status.
A good example is an NBER paper that shows that occupational licensing plays no role in consumer satisfaction. Brynjolfsson, Farronato, Fradkin, and Larsen use data from an online labor market where people can hire home improvement professionals to see whether licensing status has an effect on consumer choice. They find licensing status has no effect on consumer choice, but;
more stringent licensing regulations are associated with less competition and higher prices but not with any improvement in customer satisfaction as measured by review ratings or the propensity to use the platform again.
For one, this new change will help people save time and money. Applying for licenses cost people a lot of money and time, and so does training.
The changes will save state workers about $1.3 million in license fees, officials said. They said the changes will help Florida improve from being the fourth–most stringent state for licensing requirements, according to a recent study by the Institute for Justice, a conservative legal organization based in Arlington, Va.
Moreover, the economic shutdown has hurt the economy and a lot of workers. Relaxing restrictive regulations that do not need to exist is one way that states can help their economies heal. By removing existing onerous regulations, states will ensure an expanded range of opportunities for workers as they explore the job market. And by relaxing licensing requirements, states will improve the rate of business formation through increased entrepreneurship.