Dipa Bhattarai knows the problems with the system all too well. She started a successful eyebrow threading business, only to have it shut down by the state. Mississippi law requires eyebrow threaders to obtain 600 hours of classroom instruction, to pay thousands of dollars, and to pass two exams.
Did I mention that nothing in those classes or on those exams covers eyebrow threading?
There once was a time when occupational licensing was reserved for those occupations that most would agree should be licensed. This includes medical professionals, lawyers, or teachers. But those days are long passed.
Today, approximately 19 percent of Mississippians need a license to work. On average, licensing for low and middle-income occupations in Mississippi requires an individual to complete 155 days of training, to pass two exams, and to pay nearly $200 in fees. Those numbers will vary depending on the industry. For example, a shampooer must receive 1,500 clock hours of education. A fire alarm installer must pay over $1,000 in fees.
The net result is a decrease in the number of people who can work. A study from the National Bureau of Economic Research found that occupational licensing reduces labor supply by 17 to 27 percent. In Mississippi, the Institute for Justice estimates that licensing has cost the state 13,000 jobs. All very real numbers.
What can we do?
Mississippi has made progress. In 2017, the state adopted an occupational licensing review board to provide direct supervision over occupational licensing laws moving forward. The state has also made it easier for ex-offenders to receive licenses so they can obtain employment and restricted licensing boards from pulling the license of someone who defaults on their student loans.
All good steps, but they don’t address the underlying problems with occupational licensing. Earlier this year, Arizona Gov. Doug Ducey signed a law that provides reciprocity for all licenses, even though those states don’t do the same for Arizona licenses. A couple other states have since followed suit. And this proposal has won the praise of a Democrat running for president, Andrew Yang. He called the current limits on reciprocity bad for those seeking new opportunities. A Democratic candidate for president praising a Republican governor. It can happen.
Because this is common sense. Imagine if we needed a different driver’s license every time we crossed state lines. An individual doesn’t forget their craft because they move. Mississippi does have limited reciprocity for military families, but generally speaking the state hasn’t been open to the idea.
A bill that was introduced last session would’ve given out-of-state medical practitioners the right to practice in the state for charitable reasons. It didn’t make it out of committee. We can only speculate as to who is opposed to allowing out-of-state medical professionals to provide charity care in the poorest state in the nation.
At a time when few states offer reciprocity, it could be a great selling feature for Mississippi.
But despite bi-partisan support for reform, we also have entrenched opposition. Which is what licensing creates. The state of Utah recently bragged about nabbing unlicensed contractors. New Jersey was able to rid the streets of 29 unlicensed movers.
It is true that licensing leads to higher wages for those with a license, but it does so by driving up costs for the consumer. A Heritage Foundation report found that Mississippians pay an $800 hidden tax each year because of licensing. And we do this even though there isn’t a clear increase in the quality of service. Rather, it just distorts the free market. Which is why licensing boards are so determined to protect their monopoly.
Instead, we should trust consumers to make decisions for themselves, not the government or an industry lobbyist. We can do this through market competition, third-party ratings systems, such as an app like Yelp or even Facebook, or through private certifications that allow both the entrepreneur and the customer to decide if that certification is important.
Because if we really want more jobs and a smaller government footprint, it starts by creating an environment that encourages work; not one that encourages the creation of hurdles and obstacles.
This column appeared in the Mississippi Business Journal on August 8, 2019.