Thank you, Chairman Anielski, Vice Chairman Hambley, Ranking Member Bishoff, and members of the Committee for the opportunity to testify regarding House Bill 51. My name is Greg Lawson, and I am the Senior Policy Analyst at The Buckeye Institute here in Columbus.

The Buckeye Institute, the Heritage Foundation, the Brookings Institute, and the Obama Administration did not often all agree on economic solutions to address many of our country’s economic problems. But we all agreed on the need to relieve workers and families—especially those with lower to middle incomes—from the burdens created by bureaucratic occupational licensing. By authorizing legislative panels to weed through Ohio’s overgrown thicket of licensing boards, House Bill 51 gives lawmakers a much- needed tool for uprooting bureaucratic thistles that have long-deprived Ohioans of reaping the fruits of their labor.

No one disputes that state licensing requirements are needed in many cases and industries to help ensure public safety. Requiring appropriate education and training for physicians, healthcare providers, pilots, and truck drivers, for example, helps safeguard the general public in our hospitals, roads, and runways. But these concerns fade dramatically when applied to auctioneers, travel guides, and hairdressers—all of whom are subject to Ohio’s byzantine licensing requirements.

Take Jennifer McClellan, for instance, a new mother, a long-time professional, and a licensed massage therapist who tried to move back to Ohio to be closer to her family.[1] Despite years of training and work experience in Minnesota, the Ohio State Medical Board denied Jennifer an Ohio license because, according to the Board, she was ten days shy of the state’s training requirements.  The Board failed to consider Jennifer’s years of work experience and refused to honor the license she had already received in Minnesota. Of course, as Jennifer learned, applying for and earning state licenses takes time and costs real, hard-earned money. According to the Heritage Foundation, the burdens of occupational licensing costs the average U.S. household $1,033 per year.[2] 

Recent research conducted by analysts across the political spectrum has revealed the sources of occupational licensing and the adverse impact that it has on our job and labor markets. As part of the Brookings Institute’s Hamilton Project, researchers discovered that much of the growth in occupational licensing requirements stems from professional associations and not from public interest groups.[3] Not surprisingly, the Brookings’ research also showed that stringent licensing requirements result in fewer providers of the services subject to the requirements.[4] The Obama Administration echoed these concerns in a July 2015 report that proposed a framework for reducing burdens on those seeking to enter the professional ranks.[5] The Buckeye Institute also released a report, Forbidden to Succeed: How Licensure Laws Hold Ohioans Back, which showed not only that Ohio’s licensing burdens are well above the national average, but also that nearly every Ohio license that requires training can be earned in less time in another state.[6]

The ladder to economic prosperity is hard enough to climb without the state making it even harder and more expensive. Fortunately, several provisions in House Bill 51 hand the General Assembly new tools for weeding out some of Ohio’s most unnecessary and burdensome licenses. The bill codifies provisions that would automatically sunset cabinet agencies absent specific reauthorization. It authorizes the General Assembly to review Ohio’s licensing boards, and it provides good guidance for how legislative committees should conduct their examinations. These provisions improve the status quo in which such reviews happen only during the fever pitch of the biennial budget process. Unfortunately, as written, House Bill 51 ultimately lacks the proverbial “teeth” to force state licensing boards to prove that they are essential for ensuring public safety rather than merely defending entrenched market interests. The bill could be strengthened by including sunset provisions for state licensing boards and commissions similar to the automatic provisions applied to cabinet agencies. Significantly, enacting such reform would help mitigate the risk of litigation that Ohio faces following the recent U.S. Supreme Court’s decision in North Carolina Board of Dental Examiners v. Federal Trade Commission.[7] In that case, the Supreme Court held that when a controlling number of the decision-makers on a state licensing board are active participants in the occupation regulated by the board, then the board can only invoke state-action immunity if it is subject to the state’s active supervision. Many of Ohio’s licensing entities may now, in fact, violate federal anti-trust law. Enacting sunset provisions that would require affirmative reauthorization by the General Assembly, however, may help satisfy the Court’s “active supervision” requirement.

Beyond weighing the risks of defending anti-trust lawsuits, Ohio policymakers should recognize what Jennifer McClellan’s case makes painfully clear: requiring workers to ask the government for permission to earn a living makes Ohio less competitive, less prosperous, and less attractive to entrepreneurs and their employees. And for a state still struggling to create new jobs, “less” is not more.

Ohio has come a long way since the Great Recession, but it has not yet rebounded from the tech bubble burst and remains down over 100,000 private sector jobs from its peak in March 2000.[8] The state’s labor force participation rate has improved in recent months and is now slightly higher than the national rate, but just last year Ohio flirted ominously with historically low participation rates. So although Ohio’s job market continues slowly to improve, she still has a long way to go.[9]

Licensing requirements make finding a job more difficult. Every license requirement raises a red-taped hurdle for workers to clear before earning a living or starting a new career. Every hour of unpaid training needed to satisfy bureaucratic requirements is an hour not spent earning tips, impressing a boss, serving a customer, or opening a business. Those are hours of productivity, hours of opportunity that young, low-income workers sorely need, but that the state continues to take for itself.

Tragically, such burdens are borne no less lightly by those in Ohio’s minority communities—communities already facing daunting employment prospects. Nationally, the unemployment rate among African Americans remains much higher than among other demographics. According to the Bureau of Labor Statistics, the unemployment rate last month was 7.7 percent for African Americans compared to 4.3 percent for whites.[10] Similarly, unemployment confronts a staggering 26.9 percent of young African Americans between 16 and 19, and 13.2 percent of young whites.[11] Unnecessary, protectionist licensing—that costs both time and money—only makes the job search for African Americans even harder.

Reforming Ohio’s occupational licensing regime will help remove at least some of the burdens and obstacles to economic success, and House Bill 51 takes a valuable first step.

Thank you for your time and I welcome any questions that the Committee might have.