Nebraska Passes Occupational Licensing Reform
In a refreshing spirit of bipartisanship, Democrats and Republicans have come together in support of occupational licensing reform. Earlier this year, the Nebraska legislature passed LB 299 nearly unanimously. This bill will require legislative committees to review existing occupational licensing regulations as well as new licensing proposals. The bill is modeled after the ALEC model policy Occupational Licensing Defense Act. This law comes at a critical time as nearly 30% of the workforce is required to have an occupational license.
Occupational licensing requirements often discourage prospective workers from entering a licensed profession, which can contribute to the inability of low-income workers to improve their economic prospects. Training and licensing can be especially costly and time-consuming. The average fee to obtain a license in the US is $267, although the fees for many licenses often exceed $1,000. On top of the license fees are lengthy education and experience requirements. For example, prospective florists must pay a $114 fee to take the exam and a $100 licensing fee every year. The exam consists of arranging flowers and a written portion that examinees must pass before being issued a license to be a florist. Such onerous requirements place a large burden on workers looking to enter occupations that require a license.
Consequently, occupational licensing requirements stint economic growth. Research from the Archbridge Institute shows that across the U.S., states with more occupational licensing requirements have lower economic mobility and increased economic inequality. The federal and state governments should take steps to mitigate economic inequality, as the U.S. lags behind 27 member nations of the Organization for Economic Co-operation and Development in measures of economic equality.
These regulations can have long-term ramifications on low-income families. The Archbridge Institute found a possible negative relationship between the number of occupational licensing requirements and intergenerational economic mobility. Because licensing requirements can be expensive, it is difficult for low-income individuals to improve their earnings and support their own families, leading to a cycle of income stagnation. Furthermore, occupational licensing requirements are associated with high levels of recidivism, harming the 5 million children who have or have had a parent in prison and face enduring psychological effects and an increased risk of living in poverty.
In essence, reforms based on the ALEC model Occupational Licensing Defense Act would reduce the number of unnecessary occupational licensing regulations, placing the burden on the government to use the least restrictive means possible and prove that the license is necessary for public safety.