- Less Bad Doesn’t Mean Good
In Forbes Magazine’s Best States for Business and Careers published in 2010, Wyoming sat in the second-to-worst spot for its regulatory regime and third-to-worst for growth prospects. Regulations hinder growth because they act as barrier to entrepreneurship, and entrepreneurship is a key driver of economic growth. One type of barrier to entrepreneurship is occupational licensing. If the Wyoming government wants to improve growth prospects in the state, it must eliminate arbitrary and irrational licensing requirements.
An occupational license is a piece of paper a government hands out to allow a person to work in a particular job. Governments in all states license all kinds of occupations: from the obvious-physicians and surgeons; to the absurd-dance hall operators. To get licenses, people must jump through a number of hoops. For example, they might have to pay fees, take courses, pass exams or all three combined.
The number of jobs requiring a piece of paper from government is exploding out of control. A study published by the Institute for Justice showed that in the 1950s only one worker in 20 needed government’s permission to work in the job of their choice. Today, that number is almost one in three.
The Institute for Justice (IJ) study zeroed in on the occupational licensing of 102 low-income occupations. These include cosmetologists, emergency medical technicians and truck drivers and tend to be jobs attractive to people just entering or re-entering the labor force. The study compares each state and shows just how severe, arbitrary and downright irrational occupational licensing can be.
For example, the burden on cosmetologists in Wyoming makes no sense. The state requires aspiring cosmetologists to lose 467 working days to training compared to the national average of 372 days, and only 37 working days lost to training for aspiring emergency medical technicians. More than a year spent to train to style hair, paint nails and apply makeup is time people struggling to make ends meet just don’t have to lose.
On the plus side, Wyoming is the least bad of all the states when it comes to keeping low income workers downtrodden and away from entrepreneurial opportunities. While Louisiana licenses 71 of the 102 low-income occupations studied-the most, Wyoming licenses 24-the least. However, the burden it imposes on those 24 are high, requiring on average $173 in fees and 196 working days lost to training.
Supporters of onerous and burdensome licensing requirements say licensing protects the health and safety of consumers. But if that were true, then why does the state license fishers, taxidermists and truck drivers, not to mention earth drillers and bill collector agencies? As the IJ study states, licensing requirements have more to do with special interests lobbying to shut out competition than true health and safety risks. If the government wanted to improve entrepreneurial opportunities, especially at the lowest income levels, it should eliminate the burden on low-income occupations where the main reason for these regulations is to reduce competition.
So while Wyoming is the least bad state for burdensome, arbitrary and irrational occupational licensing schemes, that doesn’t mean it is good. If we want to increase consumer choice, reduce unemployment and create a culture of entrepreneurship, we must free people to work in the occupation of their choice.