With over 800 occupations licensed in the U.S., one in four workers now needs permission from the state to earn a living. Occupational regulation, which can include registration, certification, and licensing, often creates burdens and barriers to entry for entrepreneurs and workers alike.
Texas is working to lift those barriers and unleash the private sector. Following what is believed to be the “largest occupational deregulation in history,” the Texas Legislature plans to further ease the regulatory burden on workers in the upcoming session.
In a recent hearing, the Senate Business & Commerce Committee addressed two parts of an interim charge from Lt. Gov. Dan Patrick. The first part of the charge to the committee is to “monitor implementation of legislation to deregulate occupational licensing.” The second is to review licensing requirements and fees, and make recommendations for reductions, repeal, or transition to private sector enforcement.
First to testify before the senate panel was Brian Francis, executive director of the Texas Department of Licensing and Regulation. Francis began by noting that at the last licensing hearing in 2016, TDLR presented strategic initiatives which included deregulation of different programs and license types.
Francis said the department had completed deregulation for shampoo specialists, temporary common workers, vehicle booting, vehicle protection product warrantors, towing trainees, and eyebrow threaders. Additionally, legal services contractors are scheduled for deregulation by September 1, 2019.
State Sen. Kelly Hancock (R–Fort Worth), chairing the committee, asked how many new licenses were created during the same period that 22 were eliminated. According to Francis, three new licenses were created for transportation network companies, behavior analysts, and responsible pet owners.
Looking forward, TDLR is targeting regulations of mold, a requirement that driver’s education providers maintain a brick and mortar location, and consolidating licenses for cosmetology and massage.
Matt Mitchell, economist at the Mercatus Institute, opened his testimony with background on the state occupational regulatory climate, claiming that one in four Texans has a job requiring a license.
Mitchell pointed to the arbitrary nature of licensing rules (compared to EMTs, for example, barbers undergo 10 times more training, security alarm installers 20 times, and athletic instructors 40 times), the cartel-like dominance of licensing boards by industry players, and one case where a released convict who was trained in a profession was barred from obtaining the necessary license.
His recommendations to the panel started with appointing an independent commission to identify and eliminate burdensome and anti-competitive licensing laws. He also advocated implementation of a “least restrictive means” policy towards licensing that places greater emphasis on methods like consumer ratings. Lastly, he supported reducing the burden of proof, creating a presumption against the state when workers challenge an occupational license in court.
Subsequent testimony came from Arif Panju, attorney with the Institute for Justice, and Vance Ginn, economist at the Texas Public Policy Foundation.
Panju noted that Texas ties Alabama for the state with the most licensing boards, mostly dominated by industry insiders. He further cautioned that such a dynamic can foster self-dealing, harm consumers, and stifle innovation while offering no real safety benefits. Systemically, Panju says that the negative impact of licensing isn’t recognized because those who pay the cost aren’t as organized, nor do they have the same lobby efforts behind them.
Meanwhile, those with means and incentive to create barriers to entry advocate for licensing under the guise of public safety, often positing the worst-case scenario. “What if this terrible thing X happens? We need to regulate.”
Ginn’s testimony highlighted the 460 percent increase in licenses issued in Texas between 1999 and 2015. During the same period, population increased by 37.5 percent. He also cited research showing a 15 percent increase in wages for licensed professionals, meaning higher consumer costs, and an absence of any safety benefits.
Referencing HB 86 from 2013, Ginn noted that using a “least restrictive” approach was added to the framework of the state’s sunset process, and that sunsetting of the geoscientist board was underway via that mechanism.
With the support of Gov. Greg Abbott (who has opined on the issue both as Attorney General and as a gubernatorial candidate) and the state GOP platform, conservative lawmakers should feel confident moving forward with further reform of occupational regulation and licensing in the upcoming session.
Doing so has the potential to further unleash the power of the private sector, spurring job creation and additional economic growth.
The committee hearing can be watched here.
Source: Texas data from License to Work: A National Study of Burdens from Occupational Licensing, Institute for Justice