Left and Right Should Agree to Reform Occupational Licensing

The Rio Grande Foundation is an unabashedly free market organization, often labeled “conservative.” That doesn’t mean that we don’t agree with the political left on various policy issues, but it does mean that opportunities for such agreement require an honest assessment of reform opportunities and principles.

An ever-growing area on which left and right might agree is occupational licensing and the ever-increasing thicket of regulations facing workers as they attempt to make an honest living. This has been an issue of interest to free market advocates going back to the 1970s and economist Milton Friedman.

In a sign that at least some liberals are starting to see Friedman’s point of view, President Obama’s Council of Economic Advisors recently released a report called “Occupational Licensing: A Framework for Policymakers.”

The report detailed some of the very real problems with occupational licensing. As the paper concluded:

There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing.

Furthermore, as the report noted, there has been an explosion in the area of professional licensing. More than one-quarter of U.S. workers now require a license to do their jobs, with most of these workers licensed by the states. The share of workers licensed at the State level has risen five-fold since the 1950s. About two-thirds of this increase stems from an increase in the number of professions that require a license.

Given New Mexico’s historical lack of economic freedom, it is no surprise that the Land of Enchantment has onerous regulations on workers. A 2012 report by the libertarian Institute for Justice, New Mexico is the ninth most broadly and onerously licensed state with the 12th most burdensome licensing laws.

According to the report, New Mexico has higher barriers for more occupations than most states. Fifty two of the 102 low- to moderate-income occupations studied are licensed in New Mexico.

The state also has above-average education or experience requirements for other occupations. For example, aspiring pest control applicators and vegetation pesticide handlers lose two years to experience before receiving a license. Thirty two states have no experience requirement for pest control applicators, and 39 states have none for vegetation pesticide handlers. Fire and security alarm installers lose two years to experience, compared to averages of less than a year-and-a half among the 34 states that require licenses.

New Mexico’s mania for licensing doesn’t just harm consumers; it harms those trying to turn their lives around after a brush with the law. Under the New Mexico Criminal Offender Employment Act, even convictions not directly related to the occupation are grounds for ineligibility for obtaining an employment license.

One solution is to allow ex-offenders to obtain provisional licenses that are valid for a shorter period of time and subject to immediate revocation if they commit a new offense, violate a term of probation or parole, or violate a rule of the occupation. Such provisional licenses provide a positive incentive for success while still holding the ex-offender accountable. A few years ago Texas lawmakers specified in law that a provisional license becomes a permanent license after six months if the license holder is in full compliance.

Given the negative impact professional licensing has on middle and lower-income workers and those convicted of crimes, we would love to see a left-right coalition both among policy organizations and legislators coalesce on this issue in New Mexico.

An added benefit of a cross-partisan regulatory reform effort is that it could boost New Mexico’s lagging economy.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility