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Concerns That Occupational Licensing Kills Opportunities for Lower Income Workers

Accompanying images can be viewed on page 1 of the January 2018 issue pdf

By Larry Ray*

DC resident David wonders, “ I have been spiritual for all of my life helping as many people as possible. So, what would be the challenge of becoming a licensed DC minister? I found the challenge was coming up with the $36 [licensing fee]. So, why is DC licensing ministers?

And this from DC resident LaKeisha: “The one occupation that I love is braiding hair. For years, DC, because of licensing, kept me underground doing what I was taught to do. I cannot afford devoting more than 1,000 hours or $12,000 to get my cosmetology license. I have children to take care of.”

[Editor’s note: The requirements referred to above and how they need to be met were addressed in our July 2017 news report on the applicable DCRA regulations.

And DC resident Juanita had this to say:Soon I will be out of my child care job since now the DC education department is requiring a college degree I get paid $15 and I cannot afford the time or money for a degree. This is not a public safety issue, is it?”

About this new child care licensing requirement, retired teacher Brian replies said, I believe that this new law is going to put loads of poor folks out of jobs. What’s next,  requiring babysitters to have a degree in higher education?”

Jim, a DC-licensed tour guide questions the test. “Beyond excessive. Should not the licensing focus on the mechanics or operations of being a tour guide rather than a history test? How does knowing history — that is, which monuments are which, protect the public?”

Burdensome Requirements

Based on random surveys of DC residents, most associate licensing with safety, public health and consumer protection. But what if licensing is more about taxes, revenues, protecting existing big businesses, and governmental “parenting”?

One might reach this conclusion based on the final findings of the Institute for Justice (IFJ) first national study, “License to Work: A National Study of Burdens from Occupational Licensing.” This study is then backed up by the Presidential Commission on Occupational Licensing, ”A Framework for Policymakers.”

The IFJ report focuses on 102 occupations most likely filled by lower income workers, especially minorities. These include barbers, massage therapists, and preschool teachers, to name just three. The study concluded that DC licensing is not only widespread but burdensome:

“On the average, these licenses force aspiring workers to spend nine months in education or training, pass one exam and pay more than $200 in fees. One third of the licenses take more than a year,” concluding that these barriers make it difficult for those of lesser means to find jobs. The IFJ recommends reducing or removing needless barriers.

Of the 102 occupations identified in the report, DC licenses 31, making it the 23rd most burdensome licensing jurisdiction iun the U.S. and the 27th most extensively and onerously licensed of the states. Here in the District, on average, “those hoping to break into these occupations must pay $240 in fees, loss 311 days to mandatory training and pass one exam.

For example, 38 states (including DC) license pest control workers. The average required training is 10 days but DC requires a full year. Another example are HVAC contractors. The average is 891 days of training but DC requires 5 years — the second most restrictive rules in the country.

“Besides the District, only 3 states license interior designers. All 4 require enormous time and expense — six years-to meet the education and experience requirements.” Only six states license social and human service assistants. DC requires a bachelor’s degree. Only 11 states license “iron/steel contractors-residential”; DC is one of those jurisdictions.

One can understand why 51 states and DC license truck drivers, emergency medical technicians, cosmetologists, bus drivers, but even with these questions are raised whether absolutely every imposed requirement is actually necessary.

Why, as has been questioned in some places (not necessarily in DC), would city transit bus drivers be compelled to take five different examinations; is a $365 fee for a “pest control applicator” license or a the $430 fee for a “midwife” license reasonable?; does a preschool teacher really need 1,825 days of education and experience as a perquisite for a license?

Irrationalities of Occupational Licensure

So, how does this happen. The IFJ discovered that much of licensing is geared to protect existing businesses and prevent competition. In 2011, a Louisiana court struck down that state’s requirement that a seller of caskets be licensed as funeral directors. The court found “[t]he provisions simply protect a well-organized industry that seeks to maintain a strict hold on this business.”

If a license is required to protect public health and safety, one would expect consistency. Why do only five states license “shampooers”; is the hair or shampoo different in those five states from the other states? DC does not license shampooers.

What health and safety risks are involved with interior designers; why do only three states and DC require such a license? Many state commissions have examined this issue and recommended against the proposed licensing schemes. (Cooke, M.M. 2000, Interior Designers.)

Yet, the American Society of Interior Designers has waged a 30-year campaign in state legislatures for occupational licensure.

In 2004, the U.S Court of Appeals for the 10th Circuit (based in Denver), noted in Powers v. Harris  that “dishing out special economic benefits to certain in state industries remains the favored pastime of state and local government.”

[Editor’s note: The amicus brief filed by the Cato Institute on behalf of Pacific Legal Foundation clearly spells out the issues raised by this case.]

North Carolina recently licensed music therapists. Lobbyists declared this was necessary to safeguard the public health, safety and welfare.

Alternatives to Licensure

So, what are some alternatives to licensing? One idea is voluntary certification through professional associations which would benefit the workers and consumers. Then there are, third party consumer organizations such as Angie’s List, Better Business Bureaus or Mr. Handyman, Home Advisor or possibly home owners could protect themselves via insurance such as Total Home Protection. Professional association certification is another alternative.

But Mark Lee, a Washington Blade columnist and long-time small business advocate, declares, “While certification through professional associations is an alternate approach that has merit, such regulatory regimes are often not, or not always, a solution.

“Part of what motivates unnecessary local and federal government regulations are, in fact, the same motivators for professional certification boards, often government-sanctioned themselves. Both hope to benefit by creating a protectionist environment advantaging established commercial entities against smaller and more innovative businesses or individuals, while enjoying a self-serving financial interest inherent to fee-based certification requirements. This creates superfluous barriers to entry for new practitioners, most readily apparent in many personal services occupations.

“The real question is to what degree are professional certifications or licensing requirements actually necessary for consumer protection or ensuring the efficacy and performance of individuals providing services.”

Another alternative would be apprenticeships which are common in Europe often funded by the government. Colorado is one state that is promoting apprenticeships as an alternative to college degrees. If licensing is required, maybe apprenticeships should be included instead of college degrees.

DC might need to create a new commission that would examine all licenses to review whether or not are they necessary and if so, whether they overly burdensome. This commission could demand proof that there is a clear, likely and well-established danger to the public from unlicensed practice and then select the least restrictive alternative regulation best targeted to addressing it, with the IFJ’s conclusion in mind that “[f]inding a job or creating new jobs should not require permission slip from the government.”

According to Jason Washington of DCRA’s Professional Licenses Division. Some progress has been made, citing, as an example, “Braiding licenses currently cost $230 for two years and 100 training hours is the requirement before licensure.”

Conclusion

In the 1950s, one of 20 workers was licensed. Today, one-third of occupations require a license.

Licensing laws can lead to higher prices. Some estimates are upwards of 16%. Moreover, according to findings by the President’s Commission on Occupational Licensing, there is no evidence that licensing has any effect on increasing the quality of goods sold.

The best conclusion is to cite the Presidential Commission on Occupational Licensing’s executive summary which  posits that “. . . when designed and implemented carefully, [licensing] . . . can offer important health and safety protections. . . . The current licensing regime…creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. . . . Alternative forms of occupational regulation such as State certification, may offer a better balance between consumer protections and flexibility for workers.”

Most DC small business owners interviewed were afraid to be on the record for their comments; that is, afraid of DC agency retaliation. One anonymous owner asserted, “We simply want the government to use deductive thinking; that is, look at the facts. Will licensing protect the public and promote safety. If so, design the least restrictive rules necessary. We do not want the government to use inductive thinking; that is, decide a license is necessary and then create reasons for such.”

*Larry Ray, a DC/Ohio attorney, teaches Employment Law, Leadership and HR for the American Management Association.

Copyright © 2018 InTowner Publishing Corp. & Larry Ray. All rights reserved.