One way to put unemployed persons back in the workforce is to loosen occupational licensing laws

Throughout the duration of the coronavirus pandemic, we have come to see how burdensome rules stifle individual activity. Coincidentally, the unnecessity of these rules was more obvious in medical care because that was the most directly affected industry. But we still got to see how rules restrict employment and hinder the economy from growing overall. Despite all these eye-opening revelations, states have moved slowly to make changes regarding occupational licensing.

Minnesota licensing laws

Minnesota like most states has laws restricting health care work to professionals licensed in the state. During the emergency time period, these laws were loosened. During the Emergency period, Governor Walz instated multiple executive orders that loosened licensing laws for medical workers.

For instance, on April 6, Governor Walz authorized out of state mental health care providers to serve Minnesotan patients. Shortly after that, the governor instituted a law that covered all qualified out of state health care 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 states also instated similar orders during the emergency period.

Occupational licensing laws outside of Medicine

During the pandemic, a lot of states have moved to make changes to their licensing rules. 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.

Most of the changes states have made have been regarding health care services leaving numerous occupational licensing laws that restrict people from entering other professions. This is a big problem, especially at a time when the economy needs people to go back to work.

Minnesota occupational licensing laws are a threat to numerous jobs

Minnesota generally ranks well on the burden of licensure and the cost. However, the state has some issues upon a deep investigation of its licensing code. Minnesota ranks at the top when it comes to states whose licensure 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.

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).

Unemployment is high and loosening occupation licensing laws could help

Carefully analyzed, the positive impacts of occupational licensing are very little. However, the negative impacts are numerous. By restricting people from entering specific jobs, licensing reduces the supply of services. This raises prices, and at the same time, it also 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 compound and has a net negative impact on society which is evidenced by lower economic output.

Statistically speaking, annually, 2 million jobs are lost due to occupational licensing nationally. And this burden falls the hardest on low-income communities. And when it comes to cost,” licensing can raise prices anywhere from 5 to 33 percent depending on the type of occupation and location. It is estimated that consumers pay, in total, $200 billion annually in extra costs due to licensing”.

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.