As momentum for occupational licensing reform grows so do the depths to which opponents are willing to sink to maintain special treatment. Today’s occupational licensing laws protect established licensees, by making it more difficult for competitors to enter their industries. In fact, 30 percent of workers must seek government’s permission to work. A current fight in Arizona over exempting low-income applicants from initial licensing fees shows that this protection is apparently worth using misleading statistics to protect.
But first consider the case of interior designer licensing. Although interior design only requires a license in Florida, Louisiana, Nevada, and Washington, D.C., it takes them an average of six years and hundreds of dollars to gain the government’s permission to work.
This fight exposes the baseless nature of most arguments in favor of stringent licensing requirements. During a 2011 Florida House hearing when the American Society of Interior Designers was pushing for further licensing, licensed interior designer Michelle Early said although her profession “sounds like this simple hanging curtains on a wall… it only takes a couple things to go wrong for people to lose their lives.” Early went on to claim that improper interior design leads to 88,000 deaths per year.
To reach this number, Early assumed that interior designers may, at some point, be hired to decorate hospitals. She claimed that if the wrong types of fabrics were selected for curtains and upholstery, bacteria could spread to mattresses, causing staph and urinary tract infections and other life-threatening conditions. Since a report found that 88,000 people die each year from hospital infections, Early argued removing the possibility of inferior hospital carpet choices would completely eliminate the risk of infection.
Even though the Centers for Disease Control and Prevention’s guide to preventing health care infections mentions nothing about implementing proper interior design, facts did not stop Early from misusing this statistic. Interior design unquestionably requires skill, but that’s not a sufficient reason to create artificial, government-imposed barriers to entry. The fact that should matter is that 47 states can and do keep their residents safe without excessive licensing of interior designers.
Arizona’s Board of Nursing is currently employing a similar tactic to stymie licensing reform. The board opposes HB 2372, which exempts individuals with incomes below 200 percent of the federal poverty line from paying initial state licensing fees. The bill would ensure that those earning less than $24,000 a year will not have to pay for government permission to work. For a family of four, the exemption level increases to $49,000. According to a fiscal analysis completed by the nursing board, waiving initial licensing fees for low-income applicants would lower its revenues by $1.4 million a year. To reach this estimate, the board assumed every single aspiring nurse would receive an exemption for initial licensing fees.
The board made $4.7 million from licensing fees last fiscal year, and it had a total budget of more than $6 million. Assuming its lost revenue projections are correct, that means the board loses at most 25 percent of its revenue from licensing. In a letter to Arizona Senate Appropriations Committee members, the board wrote: “This revenue loss will significantly impact the budget picture for the agency and the agency’s ability to fulfill its mission.”
Setting aside the conversation over a licensing board needing more than $6 million in revenues to complete its stated mission to “protect and promote the welfare of the public,” it is abundantly clear that the board’s estimated losses from HB 2372 are inflated. The low-income licensing fee exemption bill does nothing to limit renewal fees, which are charged every two, four, or six years depending on the type of nursing license. Allowing more people from low-income households to work in the nursing field would lead to higher revenue for the board in the future as nurses pay to renew their licenses after a few years.
Additionally, there are the obvious cases of households’ second earners moving into nursing or applicants coming from other careers. Because of these situations and countless others, clearly some applicants will come from households with incomes more than 200 percent of the federal poverty line. These types of cases show that some initial exam applicants will still have to pay the licensing fees, especially considering Arizona’s median household income is $52,000 and the average household size is 2.65 persons. And, of course, it is important to make it clear that all these bemoaned revenue losses for the nursing board are in exchange for opening up career paths for low-income workers.
Problems with Arizona’s licensing schemes go far beyond nursing, as I wrote in the Washington Examiner when HB 2372 was introduced. Although 40 other states do not license residential painters, Arizona requires these workers to pay $870 to work in the state. Some retired painters who move to the state and want to continue practicing their craft part time cannot afford to pay hundreds of dollars to do so.
Furthermore, aspiring Arizona manicurists and makeup artists must pay an extra $247 to put their skills to use, even after completing months of required education and training. Other low-income occupations licensed by Arizona include alarm installers, funeral attendants, door repairmen, barbers, and floor sanders.
As these examples show, most of the Arizona’s licenses affect low- to middle-income occupations. Of the 102 such occupations evaluated in the Institute for Justice’s comprehensive report on state licensing, 64 required a license in Arizona.
Additionally, Arizona ranked the worst in the nation in terms of overall licensing requirements and burdens, with fees that averaged $455 per license. For someone struggling to find work, these costs act as a substantial barrier. For individuals struggling to lift themselves out of poverty, every additional dollar makes a difference.
A job is truly the most effective anti-poverty program, as only 2 percent of people who work full time live in poverty. Advancing a licensing-fee waiver for low-income individuals, as Arizona is doing, is a meaningful way to promote economic opportunity. Policymakers should not let misleading statistics propagated by established interests convince them otherwise.