Nothing matters to millions of young people like the first taste of freedom that comes with a driver’s license. In addition to getting bragging rights and the keys, such licenses keep drivers and society safer. This is a perfect example of a smart licensing system: reasonable requirements are put on to ensure reasonable standards are met to promote safety.
Occupational licensing, whereby a person needs a government license and training to legally perform their role, has exploded since the 1950’s. Today almost a third of all jobs require one. Many of these licensing programs protect big business rather than the public. If we are ever to live up to our state motto, we need to embrace smart freedom by reforming these licensing requirements.
First things first. Data suggest that the explosion of jobs requiring a license has not resulted in a meaningful correlation with safety or efficacy. While accidents have not gone down, the number of new entrants into the market has taken a sizable hit.
This is the dirty little secret about occupational licensing boards. They are partially composed of current license providers. It would be as if last year’s March Madness winner could help pick their opponents and their schedule! If we used the same convoluted logic for the tournament, we would never have heard of Sister Jean at Chicago Loyola.
March Madness is awesome. But controlling consumer costs and letting each individual make the most of their income is the only game that really counts. Imagine how many exciting new companies and products you never got to see. How much more would you have paid because they couldn’t compete for your hard-earned cash?
Basic economics says that supply and demand dictate how much a good or service is worth. By artificially shutting off the supply of new entrepreneurs, the state is effectively levying a hidden tax on consumers. But instead of getting roads or schools for your contribution, you get the short end of the stick.
Fortunately, Mountaineers have a few smart licensing reforms in the works to overcome this fraud. The most immediate course of action would be to honor other states licensees if a person with one moves here. This would open up the marketplace while ensuring safety and efficacy. If you can cut hair in New York City or Minneapolis, you can cut hair in Charleston.
As a bonus, this licensing reform could help turn the tide of population outflow from West Virginia. When even population stagnation seems out of reach, it is critical that we evaluate every option to bring more people here.
Long term, our state needs to work toward ambitious occupational licensing reform. The web of occupational licensing is thick and complex. This is no mere accident. While major reforms may take years to achieve, there is no reason not to start disinfecting with sunlight.
Arizona recently passed their first-in-the-nation universal occupational license recognition bill. One study estimates that some 750 people have jobs that would not have them if not for this reform. While the two economies vary, adjusting for West Virginia’s population could mean around 200 new jobs in a very brief period of time — at no cost to taxpayers.
West Virginia should take the lessons learned from other states and licensing systems and apply them to our outdated occupational licensing system. Arizona has proven that major reform is possible; let’s do the same in West Virginia.
