Arkansas’ Obsession with Licensing Occupations
By David Ferguson
Would you want someone to do surgery on you who hadn’t completed medical education and training? How about having someone do a root canal on your tooth after merely watching a YouTube video? (Ugh! That is too painful to think about!!!)
There are occupations where you want to be assured the person is highly trained and subject to rigorous standards. But the questions are… how many occupations actually need to be licensed and what does over-licensure do to our economic freedom? (Economic freedom, aka-the right to earn a living.)
A 2007 report by the Reason Foundation examined how many occupations each state licenses.
- California was found to require a license for the highest number of occupations – 177. California being the most regulated state probably doesn’t surprise you because of California’s reputation as being a haven of wild eyed liberals.
- But did you know the study also showed Arkansas to have the fifth highest number of occupational licenses in the nation -128.
Compare Arkansas’ 128 licenses to our neighbor Missouri, which had the least at 41, or to Mississippi, which licenses only 68 occupations. Even the huge state of Texas only has 78. Even the large liberal state of New York only had 77 licensed occupations.[i]
The number of occupations listed in various reports may vary depending on how broad the study is and could be much higher. A recent press release posted by Representative Richard Womack and some other legislators says there are 300 occupational licenses in Arkansas.[ii]
In addition, the burden Arkansas puts on these occupations is very high when compared to other states. A 2014 report by the Arkansas Center for Research in Economics (ACRE) said Arkansas has the “second-highest average burden—in terms of time and money—imposed on the licensed occupations”. A study by the Institute for Justice published in November 2017 looked at 102 lower income occupations licensed and found Arkansas has the third highest burden on these occupations.[iii]
Why does Arkansas license so many occupations?
All states regulate some occupations and Missouri has 41 occupational licenses, but do we need to license every occupation? No. Cars are repaired without mechanics having to create a Mechanics Board. The explosion of computer occupations does just fine without a state licensing board; instead jobs in the computer field rely on degrees, certifications, and the aptitude of the person.
Why has Arkansas chosen to license so many occupations? Is it because Arkansas was a Democrat controlled state for generations? No. Some of the states with relatively few occupational licenses also had a history of being a Democrat controlled state.
We have so many licenses because special interests want to be licensed. A 2007 study for Reason Foundation and a 2014 study for the Arkansas Center for Research in Economics (ACRE)[iv] both raised the issue of occupational licenses being created because special interests want to protect their turf. This matches my experience during a nearly thirty-two year career working for the Arkansas legislature.
Members of an occupation may actually think their proposed licensure law is needed to better serve the public. But behind this idea is the idea of “I can do it better” than my cheaper, less experienced competitor. But the flip side is:
- A license will increase my status. We once were just unregulated workers but now we are better… we are licensed. With a license a person can insert that fact in his advertisements and make sure people see the word “licensed” on a work van or business car.
- A license will keep out people who are not as good as me. In every licensing law there is also a strong element of keeping down the amount of competition by constructing hurdles that must be overcome before working in the occupation.
Is there a meaningful difference in the work when performed by a lesser educated or experienced person who charges less? Do the supposed benefits of the licensing law justify imposing fees and regulations on the worker and the potential increase in cost to the consumer from lower competition?
When a new licensing law is proposed, the typical question asked by legislators are: do the people in the occupation want to be licensed and will the new law cause a conflict with any other licensed occupation?
What you don’t hear asked is: Will the new license make a significant difference in the quality of the work received by the public and, if so, does the difference justify the barriers being erected to entering the occupation?
During my career as an attorney for the legislature, I wrote several bills to create new occupational licenses. I don’t recall a single instance in which consumers came to the legislature demanding to be protected through the creation of a new occupation license, nor do I recall there ever being a debate on whether the supposed benefits of the licensure law justified the new restrictions.
Every bill I worked on had its beginning with members of an occupation wanting to be licensed. Often, the interest group would show a legislator similar legislation from a big regulation state, such as California, and say “we need this too”. I have the impression that some of the legislators sponsoring such bills cared nothing about the subject but were just doing a favor for a constituent.
Once a legislator agreed to have legislation prepared, I would get a call from the legislator who would tell me to work with his constituent and the group. I would work with them to fill in gaps in their legislation, but the one thing the interest group always had before coming to see me was what qualifications they wanted a person to have to be licensed.
In preparing legislation I read many occupational licensing laws, so I would be aware of the elements that tended to go into such legislation. I noticed that if the qualifications for licensing included a test, the test would apply to future applicants and not to those initially licensed. Just another barrier to future competitors.
I am of the opinion Arkansas requires so many occupational licenses, not because we have greater need for licensure than states like Missouri, but because of the willingness of legislators to go along with new licensing laws without any scrutiny of the supposed benefits versus the existence of an actual need and whether there is a harm to economic freedom and the economy.
Just because licensees are happy doesn’t mean it is a good thing.
This is a recipe for continued growth in the number of occupations and less economic freedom.
Don’t expect to see a reduction in the number of occupations licensed in Arkansas. The special interests like the laws and the number of occupational licenses required. It is not a big issue for many legislators since the licensees are generally happy to be regulated and to exclude others.
Yet it is still a concern for conservatives who value economic freedom and who are concerned by the continual growth of government. Just because licensees are happy doesn’t mean it is a good thing.
Whether or not to license more occupations is not just a matter of your philosophy of government with Democrats and big government Republicans on one side and limited government on the other side. The issue is also a matter of our economy and on job opportunities for the next generation of Arkansans. The Arkansas Center for Research in Economics (ACRE) raised the alarm that “Arkansas’ extensive occupational licensure requirements hurt the state’s economy, particularly harming the state’s poor.”
According to ACRE, “In the 1950s, only 5% of the U.S. workforce was employed in jobs that required licensure, but licensure requirements have grown so that 29% of the U.S. workforce was employed in jobs that required licensure by 2006.”
ACRE’s analysis of how the occupational licensing affects the poor both in lost opportunities and in cost of services is well worth reading and a link to the report is provided at the end of this article.
A BIT OF HISTORY AND MORE THOUGHTS ON OCCUPATIONAL LICENSING
Frenzy to create new boards
1993 must have been a banner year for creating new occupational licenses/registration. Two new boards were created just for registration of interior designers:
- Act 847 of 1993 created the State Board of Registered Interior Designers
- Act 959 of 1993 created the State Board of Registered Residential Interior Designers.
No those are not the same thing. The distinction being one is for RESIDENTIAL interior designers.
The board without the word “residential” in its name was later abolished but its registration law didn’t go away. The board’s authority was combined with another board to form the Arkansas State Board of Architects, Landscape Architects and Interior Designers. The board with the word “residential” in its name still exists as an independent board.
Tiny occupational areas.
Some occupations requiring licensure have only a few people engaged in the occupation. For example, the Arkansas State Board of Acupuncture & Related Techniques only has thirty licensees.[v] That is thirty licenses out of a state population of about 3 million people.
Hair braiding
In 2015, the legislature passed a law exempting certain hair braiders from having to become licensed cosmetologists. While the exemption helped the hair braiders, it was not an indication Arkansas is moving away from its love of licensing new occupations. At the time the licensing of hair braiders had become a controversial issue across the country with some states changing their laws to exempt hair braiders. In addition, a lawsuit had been filed in Arkansas against the Arkansas State Board of Cosmetology. The board’s extensive requirements had little to nothing to do with hair braiding. The legislation resolved the lawsuit.
Battle of the boards
A side effect of Arkansas licensing so many occupations is – it creates more and more turf battles. In recent years some of the legislative debates have been on issues such as:
- Which medical related board is in charge of which procedures?
- Whether acupuncturists could call themselves doctors and give injections.
- Who gets to work on horses to float teeth, give a horse massage, or do horse acupuncture?
- Who can do “cupping” therapy. You probably have never heard of it but it is supposed to be a form of alternative medicine. (See definition here)
- Whether to license hair braiding?
SUMMARY
The high number of occupations requiring licensure has a negative effect on Arkansas’ economy and is a barrier to the poor people who want to work and make a living.
Yet, Arkansas is likely to remain one of the states to license the most number of occupations, because special interests like licensure and many Arkansas state Representatives and Senators have no objection to growing government. Even Arkansas Republicans are divided… with some working for limited government but many others passing legislation to grow government.
State Representative Richard Womack announced he is one of the Arkansas legislators who was selected to participate in an 11-state consortium to study occupational licenses. I hope some good comes out of the consortium, but I keep in mind that it is much easier to study the issue than to successfully eliminate even one occupational license.
David Ferguson is a former Director of Arkansas’ Bureau of Legislative Research, having a thirty-two-year career as an attorney for the Arkansas legislature. After retirement from state service his primary focus has been beef cattle farming. He is also a former officer of Conduit for Action.
[i] Summers, A. (2007). Occupational licensing: Ranking the states and exploring alternatives. Reason Foundation. Retreved from http://reason.org/files/762c8fe96431b6fa5e27ca64eaa1818b.pdf
[ii] Statement on occupational licenses posted on Facebook by Representative Richard Womack and some other Arkansas legislators posted the following to announce their selection to participate in an 11-state consortium studying occupational licensing:
There are more than 300 occupations in our state that requiring licensing. In many cases, these licenses require examinations and fees. These occupations range from hair dressers to commercial truck drivers.
There are a total of 83 authorities in our state, from stand-alone boards or commissions to state agencies, with supervising authority over these occupations.
I am proud to be one of three representatives now actively working to make sure our state is not creating unnecessary barriers for the hard working men and women who contribute to our economy daily by practicing their skills and trades.
After submitting an application earlier this year, Arkansas was accepted to participate in a national consortium of 11 states examining the issue of occupational licensing. Three members of the House (including myself), three members of the Senate and three representatives from the executive branch make up the core team of Arkansans working with delegates from other states to study issues surrounding occupational licensing and potentially develop reforms both nationwide and for individual states.
With financial support from the U.S. Department of Labor, the Occupational Licensing Policy Learning Initiative is a joint project of the National Conference of State Legislatures, the Council of State Governments and the National Governors Association Center for Best Practices. Its purpose is to:
- Improve understanding of occupational licensure issues and best practices
· Identify current policies that create unnecessary barriers to labor market entry
· Create an action plan that focuses on removing barriers to labor market entry and improves portability and reciprocity for select occupations
It is our hope that by participating in this consortium we will have a better view of what ideal occupational licensing practices look like. Earlier this month, we met with individuals from the 10 other states participating. They will continue share information over the course of the next 3 years.
We want Arkansas to be known as a place where business owners do not feel burdened by red tape and consumers will continue to feel protected. We believe both can be accomplished if we take the time to study the issue comprehensively. We will continue to update you the progress we make.
[iii] http://ij.org/wp-content/themes/ijorg/images/ltw2/License_to_Work_2nd_Edition.pdf
[iv] Snyder, T. (2014. The Effects of Arkansas’ Occupational Licensure Regulations on the Poor. Arkansas Center for Research in Economics (ACRE) http://uca.edu/acre/files/2015/04/Occupational-Licensure-Regulations1.pdf
