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Statement of Rep. Evans on Occupational Licensing

Congressman Dwight Evans, Ranking Member
Subcommittee on Economic Growth, Tax and Capital Access

House Committee on Small Business
“Occupational Hazards: How Excessive Licensing Hurts Small Business
Tuesday, February 27, 2018

Thank you Mr. Chairman for holding this hearing. Licensing is a process by which the state requires a worker to meet basic standards at the local, state, and federal levels before they are able to perform a job. While the origin of these limits had noble goals of protecting the safety and well-being of residents, we can think of instances where the requirements have proven burdensome and bear little resemblance to the function they were intended. 

It makes sense to license electricians, EMTs, daycare workers, and anesthesiologists. The harm done by an unskilled person working in one of those professions is much more serious than that of a hairdresser, travel guide, or florist. Nevertheless, occupational licensing persists and has become ever more burdensome across the nation.

Since the 1950s, the number of licensed workers has jumped from just 5 percent of the workforce to nearly 30 percent today – that’s nearly 1 in 4 workers.  Yet, not every occupation is regulated consistently across States. Fewer than 60 occupations are regulated in all 50 States, showing substantial differences in which occupations States choose to regulate.

Making the situation worse for workers, many of whom are striving to be small business owners, are the fees required, training costs, and time spent studying and testing. While the requirements serve a functional purpose, they are also a barrier for entrepreneurs to enter an occupation – especially low-income and immigrant workers.

Today’s hearing will give us the opportunity to learn more about the genesis of professional licensing and its evolution.  Though this issue is primarily one for the states to take up, it is nevertheless important for us to bring it to the forefront because it has an effect and can help guide policymaking at the federal level. 

Licensing requirements have exploded to new fields, some that merit regulation and others that raise the question of whether there is too much licensing.

States have broad powers to regulate their workers and have a duty to protect their residents.  Requirements for training, fees, and examinations can keep qualified individuals from starting a business or entering a new profession. Most importantly, licensing restricts the entry of many immigrants, minorities, and low-income entrepreneurs. For example, mandates for college degrees, English proficiency, and residency requirements have been found to exclude these workers from obtaining licenses in many professions.

And a lack of uniformity among the states in their licensing rules impact many entrepreneurs attempting to move to another market where they see an opportunity for business growth.  This is especially prevalent for military families who often move from one jurisdiction to another.

States should not be hindering growth in these viable markets for business expansion or creation – they should be fostering these self-starters.

As more Americans begin to take risks and start their own businesses, it is vital to bring licensing requirements to their attention.  Balancing the need for market competition with the need for consumer protections will give small firms the certainty they require, ensuring their success.

I thank all the witnesses for being here today and I look forward to your comments.

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