Labor Secretary Alexander Acosta urged lawmakers on Friday to reform occupational licensing laws that restrict work opportunities at the state level.
Occupational licensing requires workers in certain professions meet a standard of training or certification set by competitors. Acosta said that state licensing has become “a hindrance to the American workforce.”
Acosta urged the American Legislative Exchange Council (ALEC), a state legislator group, to rescind unnecessary regulations and to streamline others that create barriers to entry in multiple professions.
“In 1950, only about 1 in 20 jobs required a license. Today, more than 1-in-4 Americans need a license to legally perform their work,” Acosta told the lawmakers.
The labor secretary acknowledged that licensing regulations make sense when they protect consumers’ health and safety, but not when used “to limit competition, bar entry, or create a privileged class.”
Acosta said that the “cost and complexity” of these laws hurt Americans, especially poorer ones who cannot pay for licensing or lengthy training. It also discourages them from switching jobs and moving across state lines where laws may vary.
Acosta criticized the Code of Federal Regulations that has expanded over 170,000 pages since 1950, covering everything from hair braiding to selling homemade cookies.
The Institute for Justice found that of 102 occupations, the average worker is required to undergo nine months of training, to take one exam. They also have to pay more than $200 in fees to obtain a license. These regulations often protect competitors instead of consumers.
For example, a New York City law threatens a $1,100 fine for unlicensed people who are paid to care for pets. Moreover, paid pet sitting in a private home is illegal.
To become an interior designer in Washington D.C., one must spend more than 2,000 days training, pay $925 in fees, and take an exam– stringent protections against bad fashion.
A 2015 Brookings Institute study found that there were “far more cases where licensing reduced employment and increased prices and wages of licensed workers” than where it improved quality and protected consumer services. They estimated these laws cost almost 3 million fewer jobs across the country and raised consumer costs by $203 billion per year.
Acosta encouraged lawmakers to regain lost jobs and to lower costs by rescinding overbearing regulation and simplifying necessary regulation.
“You have a tremendous opportunity to help create millions of jobs, without spending a dime,” Acosta said. “The Trump administration is committed to working with you to strengthen our economy and empower the American workforce.”
This is one issue with which former President Obama and President Trump agree. Former President Obama’s 2015 budget proposal stated that licenses create “unnecessary training and high fees” that hurt labor mobility and the labor market.