Economy
Occupational Licensing
THE PROBLEM
Occupational licensing requirements make it harder for people to work in our state, and certain interest groups frequently use the requirements to limit competition.
THE SOLUTION
Give workers more options and ways to get licensed, particularly in areas where the licensing process is controlled by special interests. Provide a periodic review of all licensing requirements, eliminate regulations without proven benefits to public safety, and reduce the maximum time to receive an out-of-state licensing waiver. Remove or substantially reduce requirements for licensed occupations where the need for licensing is significantly overstated.
Licenses Should Have Proven Benefits
Occupational licensing is the government giving someone permission to work in a certain field. Obtaining a license typically involves satisfying an educational requirement and paying a fee.
Most licensing laws are justified as public safety measures or as necessary to ensure the quality of the relevant service. However, there is little evidence that occupational licensing laws provide many benefits in this regard, as demonstrated by the Mercatus Center at George Mason University in a meta-analysis of 19 different studies directly related to licensing and product quality. In only 16% of included studies did researchers observe positive relationships between licensing standards and product or service quality. Occupational licenses raise prices, impose higher barriers to entry, cost licensees time and money, and reduce innovation. Special interests use local licensing laws to restrict competition and increase prices and wages.
Issuing Waivers Efficiently
2020 marked the establishment of Missouri’s licensing reciprocity regime. Under current law, Missouri licensing requirements are waived for many professions if a person has held a valid license issued by another state for at least one year.
However, the relevant oversight body can wait up to six months to issue a waiver to an applicant. A worker considering relocation to Missouri might not be able to wait half a year before starting work in their profession. This delay may dissuade individuals from relocating to Missouri entirely.
Local Abuses of Licensing Rules
Certain cities and counties in Missouri are authorized to impose local licensing rules on construction trade groups. They often use those rules to favor union members and contractors over nonunion workers and businesses. In 2017, the legislature passed a statewide electrician license option to help electricians in urban counties who were being victimized by local licensing rules. The legislature should pass similar statewide licenses for other construction industry groups to give workers in counties such as St. Louis more options. Local governments that do not require licenses are not required to enforce the state license.
Sunset Reviews for Occupational Licenses
Many licenses are created and then exist for years without scrutiny. Not all licenses justify the costs they impose. In fact, Missouri has eliminated a number of unnecessary licenses, such as licenses for hair braiders. Barbers and cosmetologists are examples of occupations where licensing rules should be dramatically reduced. A sunset provision for all licenses would bring attention to other outdated and unnecessary requirements, helping ensure that only those licensing standards with proven public benefits remain.
POLICY RECOMMENDATIONS
- Establish a staggered sunset and review period for all professional licenses and licensing boards and reduce maximum application review times to 45 days.
- Enact optional, statewide licensing for plumbers and other construction occupations to counter the union licensing strangleholds in certain counties.
