Nearly 1 million Michiganders are subject to occupational licensing laws

Labor shortages in various parts of the economy have led to increased interest in reforming occupational licensing, as the National Conference of State Legislatures observed in March 2022. Michigan is no stranger to the problems of occupational licensing, and experts from the Mackinac Center and elsewhere laid out some of them in an Oct. 6 “Issues and Ideas” forum at The Louie Building in Lansing.

State-imposed regulatory barriers, including education and training requirements, contribute to a worker shortage and increased costs for consumers, said participants in the event, “Occupational Hazard: State Licensing Laws in Michigan,” which is now available on video. Close to one million Michigan residents are subject to these requirements, with an untold number excluded from their chosen line of work.

“When education requirements are too high for the job or unnecessarily restrictive, they end up preventing people from getting into that profession,” said Conor Norris, who studies the labor market at West Virginia University.

Norris is part of the Knee Center for the Study of Occupational Regulation, at the university’s John Chambers School of Business and Economics.

Educational requirements tied to occupational licensing can reduce the supply of workers, Norris said. He put the figure between 17% and 27% for occupations with state-imposed requirements.

Regulatory and legal barriers to work cost America two million jobs each year, Norris said. The barriers include education requirements, training requirements, and moral-character requirements in licensing schemes. The country suffers $7 billion in lost output and $185 billion in misallocated resources, he said.

Businesses that face rising consumer demand will have a hard time satisfying customers when demand increases, experts at the event said. Licensing slows the entry of new workers into a field of work, increasing costs to the consumer.

Some licensing requirements are enacted even when there is little history of consumer fraud, abuse, or mistreatment of workers, said Jaimie Cavanaugh, an attorney with the Institute for Justice.

Cavanaugh cited an industry group called the U.S. Lactation Consultant Association, which lobbied the Georgia Legislature to implement stringent new requirements for lactation consultants. There were no widespread reports of trouble caused by unlicensed consultants, but lawmakers responded in 2018 with a new law anyway.

The special interest group, Cavanaugh told NBC News, pushed the state to require the 800 specialists in Georgia to complete “two years of college-level courses and at least 300 hours of clinical experience.”

The group cited its desire to increase members’ reimbursements from insurance companies as a reason for its campaign. The Institute for Justice filed a lawsuit in 2018 against the state on behalf of a lactation consultant, Mary Jackson, and her nonprofit, Reaching Our Sisters Everywhere. Jackson and IJ won at the state’s highest court on May 31, 2023.

The court issued a unanimous opinion, saying that under the Georgia Constitution, people have the right “to pursue a lawful occupation of their choosing free from unreasonable government interference.”

Michiganders seeking to work in more than 180 occupations face licensing requirements, according to a September 2023 report from the Mackinac Center. The report calls on the state to review its licensing requirements annually and repeal unnecessary ones.

A stream of the event: