J. Pepper Bryars: Like Chilton County’s peach trees, Alabama’s occupational license laws need regular pruning
Motorists who travel I-65 between Birmingham and Montgomery during summertime often enjoy the tradition of stopping in Clanton for a freshly-picked basket of Chilton County’s famous peaches. There’s something special about that part of Alabama, a Goldilocks zone that produces those thick, juicy, tasty treats. Not too cold. Not too hot. Just right. Well, that and an awful lot of pruning. Thing is, peach trees need to be cut back annually so that they can continually produce the best and most fruit. A snip here. A lop there. Just planting them and walking away isn’t enough. Kind of like laws, and there’s no better example of such a thing than those governing occupational licensing in Alabama. When we first began planting them decades ago, occupational licensing laws were meant to ensure that those who were practicing potentially dangerous professions were doing so safely. Those early measures covered around 5 percent of the U.S. labor force, according to a recent policy memo from the Cato Institute. But like an untended peach tree, they’ve been left to grow wild. “Alabama licenses a total of 151 occupations, covering over 432,000 Alabama workers, which represents over 21 percent of the state’s labor force,” wrote the authors of The Costs of Occupational Licensing in Alabama, a special report commissioned by the Alabama Policy Institute. The report found that the initial costs of occupational licensing are $122 million, with another $45 million for renewals plus $243 million in annual continuing education costs. Those costs are eventually passed along to consumers. Clearly, these laws are due for pruning, but Alabama’s lawmakers have taken an uneven approach to the orchard lately. Near the end of the last legislative session they passed a bill that doubled the license application for landscape architects to $150 and increased the maximum fine that could be imposed on them for violations from $250 to $2,500 per instance. But they allowed a bill to die that would have reformed the Alabama Sunset Committee, the body responsible for periodically reviewing state professional licensing boards, agencies, and commissions to ensure they’re operating effectively and ethically. The bill would have added a “sunrise” provision to the process so that when a new licensing requirement is proposed, lawmakers would have an objective set of thorough standards to judge its merits, like if licensing would create an unreasonable effect on job creation or place unreasonable access or restrictions on those seeking to enter the profession. Proponents would have also needed to demonstrate how the public would be harmed without the licensing measure, and how we couldn’t be protected by other means. In other words, it would have to be more about protecting the people than protecting the profession, used only as a last resort, and even then, it would be applied to the least degree possible, but the bill failed to even get a public hearing. Lawmakers did manage to do a little pruning, though, by providing a path to occupational licensing once denied to former convicted felons. “For people who have served their full sentence … they should be able to get a job to feed their family, contribute to society, and lessen the chance that they fall back into crime,” wrote State Sen. Cam Ward, Republican-Alabaster, who sponsored the reform. Former convicts can now petition a judge for an order of limited relief, which prohibits an occupational licensing board from automatically denying their application. “The board or commission must give the case a fair hearing,” Ward said, adding that the new law “recognizes the dignity of work.” Some of Alabama’s occupational licensing laws are good. Some are bad. But most are just in need of some regular pruning. Let’s hope our lawmakers bring a good pair of garden shears to next year’s legislative session so that Alabama’s laws, like Chilton County’s peach trees, can produce the best fruit. Pepper Bryars is a senior fellow at the Alabama Policy Institute and host of the 1819 podcast. Follow him on Twitter at @jpepperbryars. API is an independent, nonpartisan, nonprofit research and educational organization dedicated to strengthening free enterprise, defending limited government, and championing strong families. If you would like to speak with the author, please e-mail communications@alabamapolicy.org or call (205) 870-9900. Permission is hereby granted to display, distribute, and quote from this publication, provided that it is properly attributed to the Alabama Policy Institute and the author. For editorial questions, please contact communications@alabamapolicy.org.
Taylor Dawson: Three reasons why you should care about occupational licensing reform
During my years working in public policy, there have been a handful of issues that have gotten me fired up. Typically when I tell people about them, they have some level of understanding—a state lottery, education and school choice, taxes and budgets, things like that. These days, when I’m asked about the issue I most care about and I say “occupational licensing reform,” I’m often met with blank stares. Once I start explaining the issue, however, people start to understand why it is so important, not just to me, but to all Alabamians. In an effort to prevent more blank stares, here are a few reasons why you should care about occupational licensing reform in Alabama. 1. The costs of licensing end up on the consumer. Think about it—if you have to pay thousands of dollars in educational costs, plus hundreds of dollars in licensing fees to the state, just to do your job, are you going to assume those costs? Of course not! Those fees will be passed on to the consumer of whatever product or service that you are selling. Selfishly, as a consumer—and a frugal one at that—the thought of incurring the cost of someone’s state-issued license is pretty infuriating. Of course, I acknowledge that in certain cases—medical services, for example—there is consumer protection offered by a license that I find to be valuable. In many cases, however, a license does not dictate whether or not someone is qualified to do their job. The beauty of the free market is that if I go to a manicurist, for example, and they do not do a good job, all I have to worry about is a bad manicure. I never have to go back. 2. Individuals shouldn’t have to get permission from the government to do a job that they are trained to do. Sometimes I wonder, “if I had to pay for a license to do my job, would I be doing my job?” Thankfully, that’s a question I’ve never had to ask. I went to college, received a degree in political science and, based on my credentials and experience, was determined to be a good candidate for my job. No license required. In my time talking to folks about this issue, I’ve heard from countless workers who have expressed disdain with the licensing process. Their main complaint is that they’ve already jumped through hoops to become educated for the job, whether that’s through formal education or work experience. A state-issued license, quite frankly, means nothing to me compared to education and job experience. 3. Occupational licensing laws may impede Alabama’s workforce development. A recent study by the Alabama Policy Institute shows that over twenty-one percent of Alabama’s workforce is licensed. The same report estimates that the total initial cost of licensing, excluding educational costs and yearly renewal costs, to be $122 million. If I am looking to get into a licensed field in Alabama, these costs are going to be a major deterrent. Barriers to entry established by occupational licensing laws are shown to disproportionately impact disadvantaged groups in Alabama—the poor, minorities, military families, and people with a record. Alabama took one step toward a solution this year, with the passage and signing of the Military Family Jobs Opportunity Act, which will significantly ease the burden of licensing on military families who have received occupational licenses in other states. Nevertheless, in order to improve economic mobility for Alabama families, there are still changes that need to be made. Here’s what I’m getting at: whether or not you are in a licensed occupation, you should care about occupational licensing reform. As consumers, we should question having to pay more for certain goods and services due to the costs of a license—especially those that have little or nothing to do with public health and safety. As empathetic Alabamians, the idea that the state often forces people to pay for a permission slip to work should inspire us to demand change. Lastly, as voters during a campaign season focused on job growth, we should call on and expect our leaders to carefully examine the burdens of occupational licensing on Alabama’s families. ••• Taylor Dawson is Director of Communications for the Alabama Policy Institute (API). API is an independent, nonpartisan, nonprofit research and educational organization dedicated to strengthening free enterprise, defending limited government, and championing strong families. If you would like to speak with the author, please e-mail communications@alabamapolicy.org or call (205) 870-9900.
Parker Snider: Monopoly and locksmiths
I love the game of Monopoly. The hope that I will land on expensive properties first, the poker-esque bluffing, and the art of deal-making with unsuspecting friends makes for a great game night. Even though I love Monopoly, I don’t always enjoy it. When I’ve missed out on important properties and am mortgaging the few I have left to pay the winner, I’m not having any fun. When it’s obvious I will not win and I slowly move from competitor to benefactor, I’m not thankful and neither are others facing a similar end. I think this distaste says something obvious: Monopoly is great for the winner. Crowding out competition and increasing prices because you have the power to do so is good sport for the already-powerful, yet detrimental to the mobility of others. Monopoly is predicated on our tendency towards self-preservation and self-centeredness. This tendency, utilized for recreation in Monopoly, is manifested in Alabama through our occupational licensing laws (also known as permission-slip-to-work laws). Take locksmiths, for example. Established in the late 1990s, the Alabama Electronic Security Board of Licensure regulates both security alarm installers and locksmiths. Not a big deal, right? Wrong. Wrong because Alabama is, as shown in a recent report, one of only 15 states that licenses locksmiths. Wrong because being in such a minority mandates we ask, “Why do we license locksmiths in the first place?” Robert Burns describes his experience as a locksmith in a video recently published by the Alabama Policy Institute. In it, he suggests that the licensing of locksmiths was established in Alabama to protect the power of practitioners – not the safety of the public – and that it makes becoming a locksmith more difficult than necessary. Before any Alabamian can work as a locksmith they must pay fees, pass tests, and wait to be approved by the government. In most of the country, these hurdles are nonexistent and residents hoping to work as a locksmith can do so when the private sector (through employers and training), not the government, deems appropriate. In Alabama, however, tendencies that should be reserved to a board game—tendencies to concentrate power towards ourselves and restrict competition—have been allowed into our occupational licensing structure. We must make every effort, therefore, to identify where licensing exists only to disincentivize entrance into a profession and to eliminate regulations where necessary. ••• Parker Snider is Policy Relations Manager for the Alabama Policy Institute (API). API is an independent, nonpartisan, nonprofit research and educational organization dedicated to strengthening free enterprise, defending limited government, and championing strong families. If you would like to speak with the author, please e-mail communications@alabamapolicy.org or call (205) 870-9900.
Daniel Sutter: A permission slip to work
All states license many occupations. Licensing, essentially a government permission slip to work, emerged in the early 20th Century and is now more extensive than ever. A new report by the Alabama Policy Institute and Johnson Center, “The Costs of Occupational Licensing in Alabama,” provides an evaluation of the current extent and costs of licensing in our state. Occupational licensing protects consumers from the consequences of high cost information. We hire expert doctors, architects, and electricians to do things we cannot. Our lack of expertise means that we also have difficulty distinguishing knowledgeable experts from quacks and charlatans. And the consequences can be deadly: a treatable illness becomes life-threatening, or faulty wiring causes fires. Under occupational licensing, a state-appointed board sets fees, training, experience, and exam requirements for each profession. Individuals not meeting the standards cannot legally practice the trade. Driving out quacks and charlatans ensures consumers that all chiropractors or massage therapists are knowledgeable professionals. Over 800 jobs are now licensed in at least one state, covering about 30 percent of the national labor force, compared with 6 percent in 1950. Today licensing extends to professions not connected to safety, like florists, barbers, and interior designers. A bad haircut might be disappointing, but hardly represents the harm caused by incompetent architects. The authors of our new study, led by Dan Smith and Courtney Michaluk Joslin of the Johnson Center combed through Alabama’s laws and regulations. Alabama currently licenses 151 professions, covering 430,000 workers, or 21 percent of our labor force. Initial fees, which average over $300, reach $1,565 for interior designers, and licensees pay additional annual fees. Currently licensed Alabama professionals paid an estimated $122 million in initial fees, plus another $45 million annually. Education and training requirements can include college and graduate or professional school (e.g., medical school). Education has explicit costs (tuition, books, materials), and less visible costs (salary not earned while attending school). Using the lowest cost training or college available in Alabama, Smith and Joslin estimate the cost of initial training for current professionals at $65 billion; continuing education costs another $243 million annually. Much of this training and education is undoubtedly necessary. No one wants to be treated by a “doctor” who merely stayed at a Holiday Inn Express. Rapidly expanding professional knowledge increases needed training and continuing education. To create value, however, each element of training must be worth the cost. This is where occupational licensing fails. The voluntary market offers many forms of training and product testing, which economists have found quite effective. Examples include Underwriters’ Laboratories for products and the American Meteorological Society’s Certified Broadcast Meteorologist program. The crucial factor for quality in markets is voluntariness. This seems backward. Shouldn’t valuable training be mandatory, so people can’t avoid it? While plausible, mandates lead professionals to merely satisfy the requirements, or check all the boxes. No one asks, Is this worth the time and cost? By contrast, professionals and the firms who employ them will only pay for voluntary training which is worth the time and cost. Market feedback is not instantaneous and exact, but typically someone will halt voluntary training which is not creating value. Low value training persists under legal mandates. Increased training and education requirements reduce the number of licensed professionals, resulting in higher rates and benefitting current professionals. Economists’ research consistently finds that licensing raises prices for consumers. And continuing education in some fields is little more than a racket, as continuing legal education illustrates. The lawyers giving talks at continuing education seminars are themselves earning credit, and are not paid much for their time. Lawyers pay a lot and spend their valuable time in boring seminars teaching little of value. Occupational licensing addresses a real problem – assuring the quality of expert services. But like much of our legal and regulatory system, it has evolved into elaborate box checking, which does not create prosperity. Licensing costs Alabamians billions, and yet is poorly designed for delivering high quality services. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Parker Snider: Alabama’s unrestrained “permission slip to work” laws affect real Alabamians
Across the country, lawmakers are realizing the costs associated with the rampant overuse of occupational licensing laws. Alabama Policy Institute’s recent report shows that over 21% of Alabama workers are licensed. This means that more than one in five Alabamians need a government permission slip to work. Although the original impetus behind states’ licensing practices was the assurance of public safety, the current system of occupational licensing has become so burdensome that voices from left, right, and center have noticed. The Trump and Obama administrations, The Institute for Justice, and the Brookings Institute, among others, are all in agreement: occupational licensing practices need to be changed. The fact is that these laws affect real people – real, everyday Alabamians. Bruce Locke, a retired construction company owner and north Alabama native, is one of those people. A dedicated husband, father, grandpa, and Army veteran, Mr. Locke, after retiring, became an auctioneer. Before he could work, however, Mr. Locke had to pay for state-approved education, apprentice for one year, and hand over hundreds of dollars in fees to the government. He fulfilled the state’s licensure requirements but, after years of being a successful auctioneer, was suddenly fined $500 by the Alabama State Board of Auctioneers. According to the board-hired investigator, Mr. Locke, who had a current license to work, was being fined for not filling out a specific form. The problem, however, is that Mr. Locke, after being a licensed auctioneer for years, had no knowledge of this form. When he asked, Mr. Locke learned that the form was created recently. Even so, he was not told about the form nor given any sort of warning. He was instead fined. Mr. Locke, therefore, under the threat of losing his business, had no choice but to pay the $500 fine. He later, out of frustration and disgust in the board’s apparent greed, gave up his license and sold his business. This is just one example of occupational licensing gone awry. Thanks to occupational licensing, Alabama ran a profitable man out of business, forsaking revenue in both sales and income tax. The truth is, as Mr. Locke put it, “There are a lot of states that do not have auctioneer licenses, and they’re doing just fine.” He’s right. There are twenty states that do not license occupation of auctioneers. In fact, the report found, more broadly, that Alabama licenses thirty-one occupations that are not widely licensed in other states, including locksmiths and sign language interpreters. If it were truly a matter of public safety, one would think there would be relative conformity among the states. The report, however, found that licensing practices are widely varied, even among our neighboring and nearby states. One explanation of this may be economic protectionism – when members of an occupation, in a desire to limit competition, lobby the state legislature to establish licensure. In Montgomery, lawmakers are reviewing legislation that addresses occupational licensing, specifically when it affects military families and veterans. Conservatives should applaud these attempts to curb big government’s grip on citizens while continuing to push for more comprehensive reforms. You can view Mr. Locke telling his story below and API’s recent report on occupational licensing here.
New report ranks Alabama 47th most burdensome occupational licensing laws
Occupational licensing runs amok in Alabama
Want to professionally wash hair in Alabama? You’re going to need a occupational license. Want to be a massage therapist? You’ll need a license for that too. A bartender? An interior designer? A locksmith? An architect? You get the idea, you’re going to need a license for those jobs as well. Simply put, an “occupational license” is express industry board/government permission to work in a chosen field. To earn the necessary license, an aspiring worker may have to anything from simply registering with the state board, all the way to examinations, or even hundreds of hours of classroom or practical experience. In 1950, roughly one in twenty Americans worked in a job that required a state-approved license or certification. Today, it is at least one in four — a whopping 500 percent increase. In Alabama, more than 140 different occupations require occupational licenses. Meaning over a fourth of the state’s workforce is affected by licensing restrictions. This form of regulation has quickly become one of the most significant and restrictive factors affecting labor markets across the Yellowhammer State. In 2015, the Institute for Justice completed a national study titled License to Work national study, ranked Alabama as being the 24th most extensively and onerously licensed state. Part of the reason for Alabama’s ranking is that the state regulates many professions that aren’t widely licensed elsewhere in the country. For example, Alabama has licensing requirements for auctioneers, tree trimmers, locksmiths, salon hair shampooers, massage therapists, and sign language interpreters, among many other jobs. Here’s what the study found of occupational licenses in Alabama: Number of low-income occupations licensed: 47 Percentage of 102 low-income occupations licensed: 46% Average fees: $328 (which is only exceeded by four states) Average education and experience (in days): 182 days Currently, occupational licensing is carried out at the state level, leaving the state Legislature to decide what occupations to license, as well as the extent of the licensing requirements. While the licenses are intended is “to ensure quality and reputability in specified professions by restricting unqualified or unscrupulous personnel from practicing,” research suggests all of these regulations and red tape are accomplishing little more than creating unnecessary barriers for those who want to work. In our nation’s capital lawmakers have begun to tackle the tackle the issue and are working “to identify and eliminate excessive occupational licensure.” In April, Michigan-Republican U.S. Rep. Tim Walberg introduced the New HOPE Act, to allow governors to use existing federal funds for technical education and do just that. And he’s not alone. Texas-Republican U.S. Sen. John Cornyn has introduced similar legislation in the Senate. “The data has shown that simply adding layers of licensing rules does not yield better safety outcomes in most fields. It’s also important to note that there are other ways to promote safety for workers and the public,” Walberg explained to Forbes. “Through inspections or insurance and registration requirements, states can protect consumers without full licenses. Where licensing laws have become too excessive, it’s time for state policymakers to roll them back to create greater opportunity for aspiring workers and entrepreneurs.” Here’s a look at 47 of moderate-income occupations licensed in Alabama:
