Opinion: A Texas-sized licensing problem
When it comes to promoting the best possible environment for business to thrive and people to prosper, Texas gets a lot of things right. Unfortunately for residents of the Lone Star state, licensing is not one of them.
Occupational licensing makes it illegal for an individual to begin working in their profession of choice before meeting minimum levels of education and training. At one time licensing was reserved for jobs like doctors and dentists. Today, estimates suggest that nearly 19%—almost one in five—workers is licensed in Texas.
In Texas, separate licenses are issued for electrical sign workers. In fact, Texas is the only state in the country to issue a separate license for an electrical sign apprentice. Unfortunately, this is just one symptom of a bigger disease.
We recently authored a report published by the Archbridge Institute. According to our research, no state in the country licenses more occupations than Texas. When it comes to licensing in Texas, everything is bigger, just like the saying goes.
Of the 331 occupations that we examine, Texas licenses 182 of them. This is more than 30 more than the national average of 150. Wyoming, by contrast, licenses just 119 of these occupations.
Our result is consistent with another national report that also ranks Texas as having the most stringent occupational licensing in the country.
What does this mean for aspiring workers, consumers, and citizens in the great state of Texas?
First, more licensing means consumers have to pay higher prices for services. We might hope and expect that with more licensing comes better quality service.
Not so fast. Unfortunately, there is not much evidence that licensing improves the quality of service.
Second, licensing reduces employment. The economic rationale here is straightforward—if you make it harder to start working, fewer people work. One recent estimate suggests that licensing reduces employment by as much as 27%
Third, licensing restricts mobility. Lots of people are moving to Texas. One estimate suggests that the state has a net in-migration of 3,800 new residents each week. Texas could be doing even better though—some of the new residents may have trailing spouses that are not able to continue working legally because of occupational licensing. Occupational licenses don’t work like driver’s licenses. As such, research suggests that occupational licensing reduces mobility by 7%.
What can be done about this? Thankfully previous work has discussed this topic in detail in Texas.
One suggestion is that Texas can take its sunset review process more seriously. When problems are raised with licensing boards, appropriate action must be taken. Policy makers should do what is best for the public and not special interest groups. And executive orders should not be used to maintain the status quo.
Second, it doesn’t make sense to make new residents in Texas jump through arbitrary hoops to keep working. Texas can look to other states like Arizona and Virginia for some guidance on how to welcome new workers to the state and not keep them idle on the sideline. New research suggests that these policies address the migration problem caused by occupational licensing.
Lastly, Texas needs sunrise review for occupational licensing. A state that gets several other things wrong, but does a relatively better job on licensing is Vermont. Vermont has one of the better sunrise review processes in the country. And it shows up in our report—Vermont licenses just 127 occupations—more than 50 fewer than Texas.
In general, policy makers in Texas should be applauded for right-sizing regulation and making Texas a great place to live and work. Licensing, however, should be right-sized and not Texas-sized.
Edward Timmons is director and Noah Trudeau is a research affiliate with the Knee Center for the Study of Occupational Regulation at West Virginia University. Timmons is also a senior research fellow with the Archbridge Institute.
This article originally appeared on Corpus Christi Caller Times: Opinion: A Texas-sized licensing problem
