Op-Ed: Too many license requirements hamper job growth

By John Colyandro and Russell Withers
Published by the San Antonio Express-News – Friday, June 21, 2013

 One of the quiet success stories of the 83rd Legislature is that attempts to license and regulate certain professions have finally failed. For the sake of a growing economy, shortening the reach of government into the private sector — specifically the regulation of professions — is a positive step for which the Legislature deserves praise.

It is becoming commonplace to require professionals to obtain the government’s permission before they may earn a living in their chosen field. So many occupational licensing bills are introduced each session that they have their own committee: the House Committee on Licensing & Administrative Procedures. This essentially creates a fast-lane for occupational licensing bills.

While it is justifiable to require some professionals — doctors, for instance — to meet certain minimum requirements because of their direct relationship with the health and safety of their patients, most training and licensure requirements for occupations such as hair braiders, bingo game operators, auctioneers and interior designers, all of whom are regulated by the Texas Department of Licensing and Regulation (TDLR), are little more than economic protectionism under the guise of protecting the public.

About 150 activities require a state-issued license before they can be legally performed in Texas, while dozens more are regulated by TDLR, even if public health is not at stake. Texas was recently ranked as having the 17th most burdensome licensing laws in the country by The Institute for Justice (IJ), a public interest law firm that fights onerous licensing regulations. IJ found that, on average, obtaining an occupational license in Texas requires $304 in fees, 326 days of education and training, and two exams. Evidence suggests that such excessive licensing requirements negatively impact job growth.

Proponents argue that occupational licensing ensures safe and reliable products and services. It is a dubious proposition that government’s seal of approval ensures anything of the sort. In a competitive and free market, one must always stay ahead of the next competitor or risk losing business. That inherently means quality, price and availability will adapt to changing market conditions. Regulation by licensure, on the other hand, results in less competition, fewer choices and higher costs.

The Legislature finally took a skeptical view of occupational licensing this session, starting a slow march toward freeing the state economy. For instance, SB 618 repealed licensing requirements for timekeepers and ringside physicians at combative sporting events. Gov. Rick Perry signed this bill.

Additionally, licensing bills were defeated on the House floor. One proposal would have created a licensing structure for foundation repair contractors and imposed criminal penalties for working in that profession without the government’s permission. Another bill would have created a licensing scheme for camera system companies. Installing camera systems can be a simple or complex task, but the market has done a sufficient job of making reputable businesses accessible for these services.

The next legislative session should be used as an opportunity to build on recent victories and make ending the proliferation of occupational licensing a priority. As legislators acknowledged this session, professionals operating in the marketplace, in conjunction with consumers, have the capacity for self-regulation that ensure price and quality without costly government intervention.

John Colyandro is the executive director and Russell Withers is a policy analyst at the Texas Conservative Coalition Research Institute, based in Austin.