Loosening occupational licensing laws is a good way to put unemployed persons back into the workforce
If there is perhaps one silver lining to the Coronavirus pandemic, it is that government officials got to see how burdensome rules stifle individual activity — something which policy researchers like us preach all the time. This has been even more evident in the medical industry, as it was one of the most heavily affected industries. By and by, we have come to see how occupational licensing rules have hindered effective responses to the pandemic, forcing legislators around the country to loosen these laws.
On April, 6, for instance, Governor Walz authorized out-of-state mental health care providers to serve Minnesotan patients — something which they could not do prior to that. Shortly after that, the governor instituted a law that covered all qualified out-of-state healthcare professionals. The law, instated on April 25, allowed out-of-state providers to render aid in Minnesota. The law also authorized physicians licensed in other states to provide telemedicine services to residents in Minnesota. Other changes during this period included temporarily waiving the requirement that out-of-state medical professionals be licensed in Minnesota.
Numerous other states have also done the same. For instance,
In signing legislation that allows his state to recognize licenses from other states, Missouri Governor Mike Parson said, “Eliminating governmental barriers to employment and allowing citizens to become licensed faster is an impactful, commonsense step that we believe will have a positive impact in the lives of a lot of Missourians.”
Arizona enacted similar reforms last year. Iowa has also created a universal licensing system with hopes of increasing migration into the state. Several more states, including California, Florida, and Missouri, have made it easier for people with criminal records to receive licenses. Florida has loosened other licensing requirements as well, as has South Dakota.
Making these changes is laudable. However, there are two problems. For one, these changes are temporary. And secondly, these changes have been restricted to the medical profession, leaving numerous other occupational licensing laws that restrict people from entering other professions intact. This is a big problem, especially at a time when the economy needs people to go back to work.
Occupational licensing laws are a threat to numerous jobs
Minnesota generally ranks well on the burden and cost of licensing laws. However, Minnesota ranks at the top when it comes to the rate at which its licensing burden is increasing. And according to the Insitute of Justice, Minnesota licenses occupations that are rarely licensed in other states, and these jobs are licensed very onerously. So, stated simply, Minnesota has a lot of room for improvement.
And given the high unemployment rate, loosening occupational licensing laws would especially be an important tool in getting Minnesotans to work.
According to research, despite having little to no benefit, occupational licensing denies workers job opportunities and reduces the supply of goods and services. This raises prices, and at the same time, increases unemployment by limiting people’s choice of work. Additionally, licensing restricts people from switching careers or even moving geographically, which increases inefficiency. All of this compounds and puts a drain on the economy.
Statistically speaking, for example, annually, 2 million jobs are lost due to occupational licensing nationally — a burden that falls the hardest on low-income communities.
There is no good reason for states to keep and even expand already existing onerous occupation licensing laws. But at a time when unemployment is especially high, loosening these laws is especially imperative. Loosening or even repealing some occupation licensing laws will make it easier for some people to find new opportunities.