Occupational Licensing: A Barrier to Opportunity In New Hampshire

The Charles Koch Institute gathered a panel of experts in Manchester, New Hampshire for a conversation on occupational licensing.

Occupational licenses—or government-issued “permission slips” to work—are becoming mandated for a growing number of professions. A significant hurdle to job flexibility, these licenses affect various professions, including interior design, floristry, hair braiding, and even fortune telling.

On March 21, 2017, the Charles Koch Institute gathered a panel of experts in Manchester, New Hampshire, for a conversation on occupational licensing in New Hampshire and across the country.

Grant Bosse, editorial page editor at the New Hampshire Union Leader, moderated the panel, which featured four experts: Ryan Nunn of the Hamilton Project (formerly of the U.S. Treasury Department in the Obama administration), Jason Sorens of Dartmouth College, Ed Timmons of Saint Francis University, and Dana Wade of the Charles Koch Institute.

William Ruger, the Charles Koch Institute’s vice president of policy and research, introduced the discussion. Ruger emphasized the “trans-partisan” nature of the issue of occupational licensing, observing that it has brought together individuals and groups from across the ideological spectrum who are focused on removing barriers to opportunity and helping people improve their lives.

Nunn, citing a recent Brookings Institution report, noted that around 24 percent of the workforce now reports holding an occupational license, up from about 5 percent in the 1950s. Sorens emphasized that this figure may actually understate the problem, since restrictive requirements mean that fewer individuals are able to obtain a license. Sorens pointed to New Hampshire’s license for cosmetologists, which requires 1,500 hours of education to complete, as an example of a barrier to opportunity.

Likewise, Timmons called attention to the Granite State’s requirement for becoming a licensed massage therapist: 175 days. He noted that massage therapy licenses require nearly seven times the 27 days of education necessary to become an emergency medical technician.

Wade stressed that occupational licensing affects low- to moderate-income professions most, harming those who can’t afford to meet the litany of educational requirements and fees. Licensing, Wade contended, “denies those specific individuals, who can afford it the least, the opportunity to climb the economic ladder.” However, Wade also reminded listeners to “never underestimate the ability of the consumer to cut through red tape,” highlighting services that offer effective market-driven rating systems like Yelp, Angie’s List, and Uber.

Nunn also pointed out that many states prohibit ex-offenders from obtaining occupational licenses—including for a misdemeanor, a charge that failed to result in a conviction, or when the crime and occupation are entirely unrelated. Citing recent research from Arizona State University, Wade noted the significant relationship between licensing and higher rates of recidivism.

Timmons warned that when states implement occupational licenses, the laws have “remarkable staying power,” despite the lack of evidence that they result in increased quality of services. Panelists suggested “sunset provisions” as one possible path to reform, which would allow for an independent review of the effectiveness of licenses. Sorens also pointed to Vermont’s “sunrise review,” which requires a review of proposed occupational regulations prior to implementation.

Occupational licenses create an unfair economic playing field, reducing competition for vested interests and creating barriers to opportunity. Learn more about the Charles Koch Institute’s work to stop cronyism and corporate welfare.

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