Graves Asks SBA to Study Rise in Occupational Licenses

Chairman’s Letter Cites Growing Economic Burden on Small Firms

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Washington, Aug 20 | comments
House Small Business Committee Chairman Sam Graves (R-MO) today requested that the Small Business Administration’s Office of Advocacy conduct a study on the rise of occupational licensing across states and the economic effects of licensing on entrepreneurs.  

In his letter, addressed to the Chief Counsel for Advocacy, Winslow Sargent, Graves outlines the steep rise of occupations subject to state and local licensure laws, which now directly affects about one in three occupations and creates barriers for entrepreneurs. According to a 2007 study, the total cost of licensing regulations to the economy is between $34.8 billion to $41.7 billion per year. Notably, a June 2014 study found that occupational licensing was the number one regulatory burden facing small firms. In an economy in which jobs are still scarce, these requirements can reduce opportunities and create unnecessary obstacles for individuals, especially those of fewer means, who want to start a business and attain economic self-sufficiency.

“At a time of economic uncertainty, when our nation’s job creators, small businesses, are struggling to stay afloat, we are concerned that occupational licensing laws which are not narrowly tailored to the public benefit could have the unintended consequence of stifling entrepreneurship,” Graves states in the letter. “Occupational licensing also may impede innovation and business development as would-be entrepreneurs focus their resources on meeting licensing board requirements rather than on meeting the needs of their businesses or customers.”

The Committee on Small Business has closely monitored this issue and as the letter states, “The Committee on Small Business has held two hearings over the past few months regarding the barriers to entrepreneurship caused by occupational licensing and we believe that this issue merits further examination.  At a Subcommittee on Contracting and Workforce of the Committee on Small Business hearing on March 26, 2014, entrepreneurs and academic experts testified on the barriers to entry that such anti-competitive licensing places on entering the market and job creation.  At a July 16, 2014, Committee on Small Business hearing the Federal Trade Commission (FTC) testified on its efforts to curb anti-competitive licensing schemes through advocacy and enforcement of federal anti-trust laws to prohibit unfair competition.” 

The entire letter to the Office of Advocacy is available HERE.

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