Occupational licensing, the requirement that people gain government’s permission to work, limits economic opportunity by making it harder for people to earn a living. These government-imposed requirements to work extend far beyond the professional fields of medicine, law, and accounting — high-paying fields for which the need for a license is commonly accepted.
Policymakers are beginning to realize the problems posed by today’s wide-ranging licensing schemes. In Arizona, for example, nearly one in four workers need a government license. Most of the state’s licenses affect low- to middle-income occupations. Out of the 102 such occupations evaluated in the Institute for Justice’s comprehensive report on state licensing, 64 required a license in Arizona.
Additionally, Arizona ranked the worst in the nation in terms of overall licensing requirements and burdens, with fees that averaged $455 per license. For someone struggling to find work, these costs act as a substantial barrier to self-sufficiency.
To lessen the harms from occupational licensing, State Reps. Jeff Weninger and Kelly Townsend, both Republicans, introduced legislation that exempts individuals with incomes below 200 percent of the federal poverty line from paying state licensing fees. The exemption level means that those earning less than $24,000 a year will not have to pay for government permission to work. For a family of four, the exemption level increases to $49,000.
Reforming licensing will make it easier for Arizonans to build careers and rise out of government dependency. Any successful welfare reform must address the government-imposed hurdles facing job seekers.
Licensing poses real-world problems. Though 40 other states do not license residential painters, Arizona requires these workers to pay $870 to work in the state. Some retired painters who move to the state and want to continue practicing their craft part-time cannot afford to pay hundreds of dollars to do so.
Furthermore, aspiring Arizona manicurists and makeup artists must pay an extra $247 to put their skills to use, even after completing months of required education and training. Other low-income occupations licensed by Arizona include alarm installers, funeral attendants, door repairmen, barbers and floor sanders.
For some people, a few hundred dollars may not serve as a disincentive or roadblock to work. But for those struggling to lift themselves out of poverty, every added cost makes a difference. Even fiscal conservatives who may worry about lower government revenues from fees must understand that there are much less harmful ways to raise funds than by charging low-income workers for a government-granted privilege to work.
A job is truly the most effective anti-poverty program, as only 2 percent of people who work full-time live in poverty. Advancing a licensing fee waiver for low-income individuals, as Arizona is doing, is a meaningful way to promote economic opportunity.
As other states work to reform their welfare programs, policymakers need to remember to include changes that lower barriers to economic opportunity. Occupational licensing reform is a great place to start.
Jared Meyer (@JaredMeyer10) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior research fellow at the Foundation for Government Accountability.
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