A new study by the Wisconsin Institute for Law & Liberty (WILL), “Land of the Free? 50 state study on how professional licensing laws lead to fewer jobs,” says occupational licensing requirements are increasing unemployment.
The study of ten occupations by WILL research fellow Collin Roth and WILL’s Research Director Will Flanders shows Wisconsin is ranked with the five worst states for occupational license requirements, according to their Red Tape Index. Hawaii had the best overall ranking. Tennessee had the worst.
If Wisconsin adopted Hawaii’s occupational license standards, employment in the ten occupational fields that were studied would go up substantially. “Employment would actually increase by 6.7 percent if we made our license requirements less onerous,” said Flanders in an interview on Wednesday. “It would be a pretty large increase in employment that we’d be projecting for those professions.”
Nationally, if states just adopted the standards of Hawaii for occupational licensing, employment in the ten job fields studied could increase by 4.5 percent. Adopting the Hawaiian standard, 23 states could see employment growth of 5 percent or above for the ten professions that were studied.
“This new study provides critical evidence that when states enact burdensome occupational licensing laws, it serves to hurt employment,” said Roth in a press release. “Policymakers must now consider if the current protections that licensing provides are worth the price in lower employment.”
Surprisingly, the amount of occupational license regulation does not correspond with whether a state is typically a “red” or “blue” state.
“It’s not a Republican-Democrat thing,” Flanders said in the interview. “Some of the states with the worst licensure burdens tend to be some of the conservative states. And some of the states like Hawaii, again, we tend to think of it as a more left-leaning state, in some case have better licensure laws.”
Despite a growing bipartisan belief that these laws impede employment, the problem continues to grow. Just 1 in 20 workers required a license to work in 1950, but today the ratio is close to 1 in 4, according to WILL.
“The findings of our study show that occupational licensing laws, or government permission slips to work, serve as a major barrier to entry for workers in America. This should serve as a clear call for reform,” said Flanders.
