Addressing Occupational Licensing Reform is Key to Growing Vermont’s Economy

In his October 11, 2017, address Governor Scott noted: “If we want to protect the public investments we value, and if we want to make more of them, we must reverse the decline in our workforce. The slow growth in Vermont’s economy, the decline in Vermont’s working-age population and tightening labor market conditions don’t allow us to be complacent.” A big step forward in this regard would be to reform and liberalize Vermont’s occupational licensing requirements.

The Institute for Justice’s 2017 publication License to Work, 2nd Edition studies 102 lower-income occupations (those that “made less than the national average income” according to the Bureau of Labor Statistics) that are licensed in at least one state. The report looks at 5 types of licensing requirements for each occupation: fees, education and experience, exams, minimum grade of schooling completed, and minimum age.

According to the report, Vermont licenses just 31 (see chart) of 102 lower-income licensed occupations (30.4%), second fewest to Wyoming with 26 of 102 (25.5%), which is good. However, in terms of “Average Burden of Licensing Requirements” we do much worse. In other words, for the occupations that we do license, our occupational burdens are unusually onerous. Our neighbors, New Hampshire, Maine and New York are all less burdensome than Vermont.

Low Income VT Licensing

Here’s one example: In Vermont, a cosmetologist is forced to complete 1500 hours (that’s 188 eight-hour work days) of education before beginning their job cutting and coloring hair. On average, states that license cosmetologists require a fee of $177. Vermont’s fee is more than double that: $360. The time and expense is unfair to the worker as well as to Vermont consumers who cannot legally pay him or her for services.

By lightening the licensing load, we can remove barriers to in migration and encourage workers from other states to come to Vermont. According to a Brookings Institute article, workers who are under 35, the age demographic Governor Scott is targeting, are 20% more mobile if they are in an unlicensed profession as opposed to one that requires a license. As far as keeping young Vermonters in state, they will be more apt to remain if they knew they could begin work immediately, rather than beginning the long slog of fulfilling a licensing requirement.

Therefore, the less licensing we have, the more skilled workers from other states will want to come (especially if these other states have dramatically more onerous licensing requirements), the more young workers we can keep, and the Vermont’s tax base will be larger.

So, how can we improve our ranking? Refusing to license more occupations would be a good start. Representative Mark Higley (R-Orleans-Lamoille) wrote on editorial explaining how regulators are trying to impose a licensing fee on residential contractors. Since residential contracting is considered a lower-income occupation in the IJ report, a more stringent regulation will have an outsized impact on Vermonters who are just getting by. In 2017, Phil Scott emphasized the need to focus on helping Vermonters in trade schools (many of whom may go into contracting work). I can’t think of a better way to help these Vermonters than to ensure they have an immediate path to employment after graduation.

Proponents of strict and broad licensing laws argue that they are necessary for quality control. But, in this day of YELP, Angie’s List and other crowd-soured, social media rating systems consumers are better armed than ever to police quality of service without the need for government, especially regarding occupations which pose no threat to consumer safety, i.e., barber and auctioneer. And, If Vermonters are not comfortable with unlicensed practitioners, there are far less onerous options for protecting consumer safety than the extreme of licensure, such as voluntary certification.

We should consider updating these licensing laws to reflect our commitment to offering the widest range of employment options to low-income Vermonters, which would in turn grow our economy.

The choice is not just between “competition” or “licensure.” We owe low-income Vermonters the chance to work without needless impediments. If we roll back occupational licensing, Vermont will have a stronger labor market and economy as a result.

License Triangle

{ 1 comment… read it below or add one }

Milan Miller February 10, 2018 at 8:33 pm

Don’t agree.Licensing protects the licensee. It serves as an endorsement.”The State says I am qualified to do this job.” Also will weed out crooks.

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