More Evidence License Mandates Protect Special Interests Over Consumers

Needlessly complex and rigorous occupational licensing requirements are holding back Michigan’s economy and limiting job opportunities for those who need them the most, according to backers of legislation presented in the state Senate Tuesday.

The legislation, ​Senate Bill 40​, would require that new licensing standards be tailored in the least restrictive way needed to protect consumers and the public.

Under the legislation, introduced by state Sen. Lana Theis, R-Brighton, Michigan’s existing rules would also be reviewed for adherence to the least-restrictive standard, along with recommendations for revision or revocation.

Theis told the Senate Regulatory Reform Committee that reforming occupational licensure provides a way to boost the COVID-ravaged economy, provide opportunities for poor or unemployed workers and generate state revenue without raising taxes.

Occupational training that is costly and time consuming poses a significant barrier to those seeking to break out of poverty, she said.

Jarrett Skorup, communications director for the Mackinac Center for Public Policy, said the occupational licensing scheme in Michigan is often incoherent, requiring 1,800 hours of training for a barber, for instance, but only 1,300 hours for a commercial pilot.

Some state licenses are simply unnecessary, he said, especially in occupations where on-the-job training and apprenticeships provide more effective and immediate assurances of competency.

Committee Chairman Sen. Aric Nesbitt, R-Lawton, expressed reservations about ceding legislative authority to the state commission which, under Theis’s bill, would conduct the reviews.

But he also said licensing requirements are sometimes used by incumbent practitioners to limit competition, rather than as a means to protect consumers.

According to an analysis​ by the Institute for Justice, a national legal advocate for individual liberty, excessive licensing regulation in Michigan costs the state almost 80,000 jobs and billions of dollars in foregone economic activity. IJ Legislative Counsel Lee McGrath said Michigan should follow the lead of states like Nebraska and Ohio, which have enacted comprehensive reviews of occupational licensure, or Florida, which recently approved a measure to repeal or reform license requirements for 30 occupations.

The Theis legislation incorporates some elements of an earlier proposal for occupational licensing reform that focused more directly on barriers to licensure for those with criminal records. That earlier legislation would make convictions disqualifying for licensure only when the criminal act could be viewed as inimical to the objective of licensure. An example would be a conviction for child molestation by a prospective day care worker.

That measure passed the state House in 2018, but it died in the Senate. McGrath said the new legislation would still allow the review commission to recommend revisions in how the state uses criminal histories in granting licenses.

Among the supporters of the 2018 legislation and the 2020 proposal is the ACLU of Michigan. A spokeswoman for the ACLU was not immediately available for comment.

A representative of the Michigan Association of CPAs appeared at the hearing in opposition to the bill in its current form. He said it could result in Michigan CPA regulations falling short of nationally accepted standards. The Michigan Realtors Association also expressed its opposition.