News Story

Lawmakers Consider Regular Review Of Burdensome Occupational License Mandates

Do they really protect public health and safety — or just restrict competition?

Michigan lawmakers are considering a bill to require a regular review of state occupational licensing laws. These laws apply to hundreds of occupations in Michigan, requiring people to take tests, obtain education credentials and pay fees before they are allowed to earn a living in a specific field.

This week, the Senate Regulatory Reform Committee heard testimony on Senate Bill 40, a licensing reform bill introduced by Sen. Lana Theis, R-Brighton. Among other things, it would require regular periodic reviews of whether particular licensing mandates protect public health and safety.

Proponents of the measure argued that it would open up more employment and career opportunities, especially for lower-income citizens, who face greater obstacles in obtaining the required credentials. Theis said the bill would create a process to “ensure that new legislation does not create burdensome occupational regulation, and to review state law to ensure that current statute is not overly burdensome.” She added that the state should apply the “least restrictive regulation necessary to protect consumers.”

Under the Theis bill, the Michigan Law Revision Commission would have the power to recommend that legislators change or even repeal licensing laws that exceed the “least restrictive regulation necessary.” The commission is a bipartisan group of legislators from each chamber of the Michigan Legislature.

Others testifying in favor of the bill included Jarrett Skorup, communications director of the Mackinac Center for Public Policy; Annie Patnaude, Michigan director of Americans for Prosperity; Lee McGrath, senior legislative counsel for the Institute for Justice; and Alicia Plemmons, a Southern Illinois University economist. Plemmons is also affiliated with the Knee Center for the Study of Occupational Regulation at St. Francis University, in Loretto, Pennsylvania.

Skorup said that Michigan’s licensing laws impose undue restrictions on numerous professions and often make little sense. He asked committee members, “So, who needs more training hours in Michigan — barbers, or airline pilots? It’s barbers. We mandate 1,800 hours of training for barbers in the state; it’s about 1,500 hours for commercial airline pilots.”

Skorup also said Michigan’s licensing laws have a broad reach, with about 20% of the workforce being subject to some kind of licensing restrictions. These laws, he said, are often only loosely related to promoting public health and safety.

Patnaude said licensing creates a barrier to work, particularly for people with a low income, less education, or a criminal history. Often, Patnaude said, high fees and excessive training requirements can dissuade struggling and underprivileged workers from pursuing careers in industries that are high-paying but also heavily regulated.

Plemmons told the committee that minority groups, in particular, are hurt by licensing laws.

“This licensing process, especially when we consider the high financial cost of some of these licenses, and how many of them only offer English examination and no other languages, reduces minority and immigrant business ownership and disproportionately prevents access to many consumer markets from minority communities,” she said.

According to Plemmons, customer reviews and consumer reports that are easily accessible on the internet may render licensing laws unnecessary.

“We are in the information era,” she said. “If a painter does a poor job, it’s going to be posted on various websites. ... Information is there at any moment for consumers to use when they’re making their painter selection. While most occupational licenses were originally designed in the 1970s and 80s, these tools were not available. ... Licensing at that time had to serve as a sign of quality. Today this is no longer a necessity.”

The internet, Plemmons said, provides a way for a market to be self-regulating and weed out poor service providers, which is what licensing laws are supposed to do.

The Michigan ACLU did not provide testimony, but it did submit a letter expressing views similar to those of Plemmons.

McGrath, of the Institute for Justice, emphasized the potential for replacing licensure mandates with less-burdensome approaches. “One size shouldn’t fit all,” he said. “Michigan can adopt a system of fitting the regulation to the needs that consumers have.” He said there are other ways and entities that can protect consumers, such as inspections, trade associations, private certifications, competition, and civil lawsuits. Licensure, he said, is most restrictive option.

Bob Doyle, president and CEO of the Michigan Association of Certified Public Accountants, expressed skepticism, arguing that Michigan’s rules for CPAs, insurance agents, and lawyers are based on nationwide standards.

“Changing [licensing] standards in Michigan would inhibit Michigan CPAs from practicing across state lines without obtaining additional licensure,” he said.

Doyle also said that the association was not completely opposed to the bill and would support it if it were changed. Theis said she was eager to work with the association to improve the bill.