Paperwork
Corianna Baier

Following in Arizona’s footsteps, Pennsylvania enacted an occupational licensing reciprocity law on July 1. This means Pennsylvania will accept occupational licensing from other states, given that certain criteria are met. Teachers, among others, can now move to Pennsylvania and start working immediately, instead of having to wait to get a new license. This reform will reduce barriers for workers and make Pennsylvania a more attractive choice for workers.

Missouri should take note, since it licenses over 200 professions and does not have a reciprocity law that applies to all workers.

Put simply, an occupational license is the government giving you permission to work for pay. Show-Me Institute analysts have written  about the negative effects of licensing in the past; it can be especially harmful to specific people and industries. An Institute for Justice (IJ) report details the significant negative effects licensing is having on Missourians.

Twenty-one percent of Missouri workers need a license or certificate to do their job—that’s higher than the national average of 19%. Architects, barbers, interior designers, massage therapists, and others all have to pay fees and follow government instructions to do their jobs.

IJ estimates that Missouri has lost 38,556 jobs and $188 million in output due to licensing requirements. To take one example, cosmetology jobs go unfilled because a lot of people can’t pay hundreds in fees, nor can they commit to 1,500 hours of schooling. The same thing happens with  other professions. Unfilled jobs mean missed opportunities for output, including new products and more services, resulting in  less economic activity in Missouri.

Money, time, and human capital could be used more efficiently with less restrictive licensing.  IJ estimated the amount of misallocated resources in Missouri, or resources that were not put to their most efficient use, at $3.55 billion. Workers devote time and money to unnecessary education, consumers pay higher prices to cover the costs of licensing, and people get jobs outside their area of expertise because they cannot meet requirements. All of these burdens on workers hurt our economy.

Occupational licenses have become much more burdensome than helpful. While the reciprocity laws passed by Arizona and Pennsylvania don’t completely eliminate the problem, they do reduce barriers and promote mobility in the workforce. Missouri is bearing substantial costs from occupational licensing. Why is Missouri standing in the way of people trying to earn a living?

 

About the Author

Corianna Baier
Corianna Baier
Analyst

Corianna grew up in Michigan, where she earned her B.S. in Economics from Hillsdale College.