Alabama ranks 46th in the nation in labor participation. Nearly 43% of the working-age population is unemployed and not seeking a job.
Why have so many Alabamians taken themselves out of the workforce? It is in no small part because Alabama’s government makes it much harder to start a career or change an occupation than most states.
One of the biggest barriers to entering the state’s workforce is occupational licensing. According to a 2018 report from the Alabama Policy Institute, Alabama ranked 47th in the country in terms of having the most burdensome occupational licensing laws.
Alabama licenses 151 occupations, covering nearly half a million workers. Sixty-three of the licensing requirements fall on low-income workers. This includes occupations such as barbers, shampoo assistants in salons, manicurists and security alarm installer helpers. There are 12 occupations that require a state license just to serve as an apprentice, intern or trainee.
How many times have you walked into a barber shop or salon and looked for the employee’s license before receiving a haircut? When your air conditioner goes out in the middle of July, do you ask the contractor to see their license before they fix it? I never have.
Most of us choose a business based on the recommendation of a friend, reputation, a Yelp review, etc., not because we know or care that person has been licensed by and paid fees to a state board. With so much information available to consumers at their literal fingertips, are licenses really an effective measure of the quality of a business professional? In most cases, no.
The costs are also burdensome for potential workers.
Initial licensing fees can exceed $1,000 and state licensing boards require annual license renewals for many occupations. In 2018, combined license and renewal fees totaled an estimated $167 million. Continuing education requirements added another $243 million in costs to licensees.
Licensing costs combined with associated educational requirements provide too great of a barrier to entry for some workers. Excessive licensing also reduces occupational mobility and entrepreneurship, leading to lower workforce participation and higher consumer prices. Why enter a field if you know there is little chance of advancement?
Let me be clear. Not all occupational licensing is bad. For some professions, it is a necessity as is continuing education.
But far too often it is the elites of a given profession who sit on licensing boards. They set the occupational standards and serve as both judge and jury when it is alleged that those standards have not been met. Favoritism may be shown to individuals at high levels of the industry as opposed to independent contractors. The power of licensing boards can be used to impose punitive damages on a professional, rather than protect the public. Permanent damage can be done to someone’s career.
What should Alabama’s government do to make the licensing process less burdensome and easier for citizens to find employment?
The state’s occupational licensing structure needs a complete overhaul.
The legislature should conduct a thorough review of current occupational licenses. Lawmakers should ensure that unnecessary requirements or excessive costs are not a prerequisite for licensing. They should determine if removing a currently required license would create a threat to public safety. If it does not, the license should be eliminated.
Many occupational licenses have nothing to do with public safety. It’s about control and making money.
America is supposed to be the land of opportunity, where anyone, regardless of how rich or poor they were born can better themselves through hard work. Putting barriers in place to achieve that dream takes opportunities for advancement and economic mobility away from citizens. Onerous licensing requirements are inherently un-American.
Another possible reform is the universal recognition of out-of-state licenses. This would reduce barriers to entering Alabama’s workforce by allowing an individual who is licensed in another state (with comparable or stronger licensing requirements) to be able to practice their profession in Alabama without having to go through the licensing process again. Universal license recognition could potentially attract new residents to the state and improve workforce participation. The state already allows this for military families.
State government could also re-examine its hiring process to allow easier access to some positions. Maryland recently removed a four-year college degree requirement for thousands of state jobs, allowing candidates to substitute work experience or an apprenticeship in place of a degree. Alabama should consider similar reforms.
For most Alabamians, the American dream is to be able to work hard and improve the quality of life for yourself and your family. Our government should do everything it can to make that dream a reality, not be an impediment to achieving it.
Justin Bogie serves as Senior Director of Fiscal Policy at the Alabama Policy Institute. The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to: Commentary@1819News.com.
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