Occupational licensing, the state-enforced professional requirements for individuals seeking employment in certain industries, is widespread among U.S. states. Workers in hundreds of different industries, many of them not offering any risk of public danger or malpractice, are required by the states to obtain expensive training and permitting to allow them to practice in such industries. While many industries, such as those involving on-the-job hazards, can be entirely justified in requiring licensing, a significant number of licensing laws exist to prevent entrance into industries like hair braiding, floral arranging, translating, auctioneering, and tree care. The economic cost of these barriers to entry is demonstrably high.
Alabama, like most states, is held back by hundreds of unnecessary licensing laws which affect hundreds of thousands of workers. A new report by Atlas Network partner Alabama Policy Institute (API) and the Johnson Center of Troy University, titled The Costs of Occupational Licensing in Alabama, details the extent of economic damage done by unnecessary licensing laws, whether it be reducing occupational mobility and entrepreneurship or increasing unemployment and prices consumers must pay.
“Our report details the full costs of licensing in Alabama, from education to required training to fees, of all licensed workers in the state,” said Courtney Michaluk, policy analyst at the Johnson Center and co-author of the report. “Occupational licensing reform has become such an important issue on the national level, and states are starting to consider whether licenses to work are really necessary and whether this practice threatens individual economic freedom.”
In Alabama, 151 different occupations require licenses. This covers over 442,000 workers, or 21 percent of Alabama’s workforce. The cost of educational requirements totals in the hundreds of millions of dollars annually. API estimates the total initial costs of occupational licensure, excluding the educational costs, to be $122 million. “Annual license renewal costs both workers and consumers (who often pay for these costs in increased prices) $45 million total,” API reports. “This pales in comparison to the total initial education costs, which we estimate to be $65 billion and the estimated $243 million annual continuing education costs for licensed workers in Alabama.”
While there are certainly hazardous occupations which require a mandatory education and testing process to ensure public safety, a number of occupations requiring licenses in the state are clearly the result of industry lobbying groups desiring to restrict entry of newcomers into the respective industries, not for any public safety justification. These include sign language interpreters, make-up artists, hair shampooers, hair-braiders, auctioneers, tree trimmers, athletic trainers, and others.
“Occupational licensing reform is a bipartisan issue that we can work together to solve,” said API’s senior director of policy relations, Leigh Hixon. “… Reforms could help reduce the costs of occupational licensing on Alabamians, especially for vulnerable segments of the state’s population, by lowering prices, increasing competition, giving consumers more choice, and increasing economic opportunity. We are encouraged by the overwhelming interest in and support of this report and hope to see efforts to reform occupational licensing in Alabama come as a result.”
The Alabama Policy Institute received a grant from Atlas Network to support their occupational licensing report project.