Economic empowerment is one of six key areas of focus for The Path Forward.
We seek solutions that open pathways to capital, markets, and opportunities, and ensure that regulatory infrastructure enables Black businesses to flourish and grow. To this end, TPF hosted a presentation by Dr. Dick Carpenter, Senior Director of Strategic Research for the Institute for Justice, and entrepreneur and businesswoman Melony Armstrong, on the economic burdens of occupational licensing and their disproportionate impact on communities of color.
Current licensing requirements perpetuate the cycle of poverty by guarding entry into hundreds of occupations, including jobs that offer upward mobility to those of modest means. Research provides little evidence that licensing does what it is supposed to do—raise the quality of services and protect consumers. Instead, licensing laws often protect those who already have licenses from competition, keeping newcomers out and prices high. It’s estimated that licensing results in nearly three million fewer jobs and adds more than $200B in costs to consumers each year.
LICENSING AS A FENCE
“A common perception is that licensing laws are adopted through rational policy-making — weighing costs and benefits — to benefit the public. This is a complete misperception,” says Dr. Carpenter. Licensing proponents argue that licensing protects consumers and provides a measure of quality control for services. Dr. Carpenter’s research has found, however, that public interest is rarely the motivating force behind licensing statutes. Instead, they are often passed at the behest of those already in the occupation to keep others out. These requirements typically far exceed what’s necessary to safely and effectively do one’s job, further deterring entry into the occupation, reducing competition and providing an economic advantage only to those already in the industry.
States have varied and often inconsistent licensing rules. Workers that practice an occupation in one state may be required to pursue additional credentials or start from scratch if they move to another state — even if they’ve led a successful career for years. These barriers make little sense. Crossing a border should not make someone suddenly unqualified to do their job. Economic mobility is often linked to a job seeker’s ability to move to more desirable markets. The barriers of licensing disincentivize doing so.
Licensing burdens may be particularly onerous for minority and low-income candidates. Minimum education requirements restrict access for those in communities with inadequate schools and chronic achievement gaps. Mentorship/apprenticeship requirements are less likely to be met in communities where there are fewer mentors and role models in a desired industry. The sheer costs associated with the training, testing, and time required to gain access to an occupation may be overwhelming for those with limited means, often leading to significant and irrecoverable debt.
Minorities also suffer disproportionate harm from state laws prohibiting formerly incarcerated people from accessing licensing opportunities. In a cruel twist, a state that spends money and time to train someone to learn an occupation in prison may then prohibit that person from actually working in the occupation for which they’ve trained. Criminal background provisions may be neutral on face value, but are more likely to impact minorities that endure higher incarceration rates.
A CASE STUDY IN REFORM: MELONY ARMSTRONG
For Ms. Armstrong, licensing reform was a career game changer. After mastering the skill of African-style hair braiding, she wanted to start a legal hair-braiding business. She learned that the braiders across her state of Mississippi were prevented from practicing or teaching their craft until they completed several thousand hours of cosmetology training that did not include African hair braiding. She challenged the state’s cosmetology laws in court — and won. Braiders are now simply required to pay a small fee, meet basic health and sanitation guidelines and complete a self-test. Since the new law took effect, nearly 1,500 braiders have registered with the state. Ms. Armstrong has expanded her career, opening a hair-braiding academy and a hair-braiding program for young girls.
“Breaking those barriers opened opportunities and I began to see the need to empower other people. It is incredible to see these women empowered with something as simple as hair braiding,” says Ms. Armstrong. “I’m amazed at the ripple effect. Being able to get that law passed has empowered me more to empower others.”
We believe that immediate occupational licensing reform is necessary to create jobs, empower entrepreneurs like Ms. Armstrong, and reduce the barriers to a fundamental human right — the right to earn an honest living. Reform will require a multi-faceted approach. We encourage TPF members to:
- Educate their communities and lawmakers about the burdens of occupational licensing and support the repeal of needless licenses. The initial goal is to eliminate any licensing laws that do not advance public health and safety and replace them, if necessary, with less restrictive alternatives.
- Advocate for voluntary and non-regulatory alternatives to licensing like market competition, voluntary third party professional certification, and quality service self disclosure. A detailed description of alternatives can be found in this excellent piece on licensing by Dr. Carpenter.
- Share informational resources. Below is a list of links with helpful information, including the complete national study of the burdens of occupational licensing led by Dr. Carpenter.
License to Work: A National Study on the Burdens of Occupational Licensing (Dick Carpenter et al/Institute for Justice)
You’ll Need a License for that Job (Dick Carpenter/Heritage.org)