Occupational licensing reform would free up jobs for more Ohioans

Around the country, too many occupational licensing laws serve not to protect the health and safety of consumers, but the wallets of industry insiders.

Some states, for instance, require professionals to have a license to braid hair or even arrange flowers – hardly dangerous activities. Ohio has some of its own licensing head-scratchers: It is 1 of only 10 states to license upholsterers, 1 of 37 to license shampooers, and the only state to license social and human service assistants.

Too often, these requirements hit the poorest individuals and other vulnerable Ohioans the hardest.

The Libre Initiative – a nonprofit organization promoting free enterprise to the Hispanic community – stresses the harm unnecessary and burdensome licensing does to consumers. “Even today, occupational licenses cost the average Ohio family an additional $775 per year,” Libre’s Ohio Coalitions Director Ezra Escudero said in prepared testimony at the Statehouse to support licensing reform. “This is a real tax, especially on the poor and the middle class, restored citizens, Latinos in Ohio, entrepreneurs with dreams and many others.”

Indeed, Ohio’s licensing regime is especially burdensome on low-income individuals and those with the least amount of education. Not only do they end up paying a greater share of their income as consumers of pricier goods and services, they have the most trouble affording the very licenses they need to earn that income. The average license for a low- to moderate-income job in Ohio takes 350 days of required training – a big lift for those without means.

As a report from the Buckeye Institute think tank notes, “In essence, occupational licensing erects barriers to employment to those most in need of good-paying jobs.”

Ohio also suffers from an epidemic of duplicative licensing. In other words, not only does the state license too many professions, but workers often need to obtain a second, local-level license on top of their state license to work in certain localities.

As my R Street Institute colleague C. Jarrett Dieterle explains, these additional licenses don’t help protect consumers, but they do make it harder for residents to get jobs. Dieterle also notes that local licensing hampers mobility, both to and within the state of Ohio – if someone knows they will have to go through more hurdles to work in a given locality, they may decide not to move there.

In fact, research has shown that among those most harmed by occupational licensing are military families. Military personnel and spouses move more often than most Americans, and often times they must renew their licenses when they are transferred to a new state.

A third group that suffers substantially from licensing burdens are former prisoners. Every year, 22,000 prisoners are released from incarceration in Ohio. These people will need to find jobs quickly to get their lives back on track. A study by the Manhattan Institute finds that ex-offenders who are hired quickly after being released are less likely to reoffend than their unemployed counterparts. Too often, however, arbitrary “good moral character” provisions in licensing laws allow licensing boards to deny licenses to ex-offenders due to crimes that are completely unrelated to the job for which they seek to be licensed.

Fortunately, legislation introduced at the Statehouse would solve many of the problems caused by occupational licensing. House Bill 583, introduced by Rep. Michael Henne, R-Brookville, would stop Ohio’s local governments from creating new licenses and from licensing occupations that are already licensed by the state. Henne explained that to become a general contractor, plumber or electrician in Canton, you need to pay an additional $225. Plumbers in Dayton have to pay an additional $250, and if they want to work in Columbus, they need to pay $350 for a local license.

The legislation would also waive initial licensing fees on both the state and local levels for those whose household incomes are below 130 percent of the federal poverty line, as well as for military spouses, active duty military personnel, widowed spouses and veterans.

Finally, the bill would require licensing boards to list the criminal convictions that would lead to applicants being denied a license, and would allow applicants to petition licensing boards at any time to find out if they are eligible for a license. This adds much-needed transparency to the process.

As Henne puts it, “Ex-offenders do not need welfare or hoops to jump through; they need work.”

These commonsense reforms are all aimed at helping people find and keep jobs, and therefore warrant bipartisan support. If Gov. John Kasich signs this bill, more Ohioans would be able to work and advance their careers.