Columbus, OH – Greg R. Lawson, a research fellow at The Buckeye Institute, testified today (see full text below or download a PDF) before the Ohio House Federalism and Interstate Relations Committee on Senate Bill 255, which would give Ohio legislators the power to rigorously review existing and new licensing laws.

Highlighting the real impact occupational licensing has on Ohio, Lawson shared the story of Jennifer McClellan, who was a new mother in 2016, and a licensed massage therapist. Jennifer wanted to move back to Ohio to be closer to her family, however her license application was denied because her Minnesota license was 10 days shy of Ohio’s requirement, and the Ohio State Medical Board would not honor Jennifer’s years of training and work experience.

Of Jennifer’s story Lawson said, “Tragically, such cases plague Ohio’s minority communities—communities already facing daunting employment prospects. Nationally, the unemployment rate among African Americans remains higher than among other demographics. State permission slip policies that make it harder and more expensive to find work only exacerbate the problem, adding insult to injury in our job-deprived minority communities.”

There is a solution for Jennifer and the thousands like her—and it is a solution supported by policy experts across the political spectrum. Noted researcher Morris Kleiner, the AFL-CIO chair of labor policy at the Humphrey School of Public Affairs at the University of Minnesota, testified before Congress that, “The reality is that occupational licensing is likely to reduce employment growth, contributes to unemployment, and increases costs to consumers.”

And Salim Furth, former macroeconomics research fellow at the Heritage Foundation, found “occupational licensure at the state level costs consumers $127 billion per year.”

However, as Lawson points out, the policies in Senate Bill 255 “give lawmakers a much-needed tool for uprooting bureaucratic thistles that deprive Ohioans of the potential fruits of their labor.” And he closed saying, “Senate Bill 255 begins the overdue effort of reforming the state’s occupational licensing regime and ending a misguided permission slip policy that has stood in the way of growth and prosperity for far too long.”

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Interested Party Testimony on Senate Bill 255
Before the Ohio House Federalism and Interstate Relations Committee 

Greg R. Lawson, Research Fellow
The Buckeye Institute
November 27, 2018

Chairman Roegner, Vice Chair Becker, Ranking Member Leland, and members of the Committee, thank you for the opportunity to testify today regarding Senate Bill 255 and Ohio’s need for occupational licensing reform.

My name is Greg R. Lawson. I am the research fellow at The Buckeye Institute, an independent research and educational institution—a think tank—whose mission is to advance free-market public policy in the states.

Ohioans should not have to ask the state for permission to earn a living. Yet, all too often, Ohio creates permission slip policies that make it harder—and sometimes impossible—for Ohioans or would-be Ohioans to pursue their careers and put food on the table for their families. Such policies must end.

Consider Jennifer McClellan. A new mother, a long-time professional, and a licensed massage therapist, Jennifer tried moving back to Ohio to be closer to her family, but the Ohio State Medical Board denied her license application because she was 10 days shy of the state’s training requirements.[1] The board unduly discounted Jennifer’s years of training and work experience, and would not honor the license she had already earned in Minnesota. Jennifer is not alone.

Tragically, such cases plague Ohio’s minority communities—communities already facing daunting employment prospects. Nationally, the unemployment rate among African Americans remains higher than among other demographics.[2] State permission slip policies that make it harder and more expensive to find work only exacerbate the problem, adding insult to injury in our job-deprived minority communities.

No one denies that state licensing requirements are needed in some cases and industries to 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 and on our roads and runways. But these concerns fade quickly when applied to auctioneers, travel guides, and hairdressers—all of whom are subject to Ohio’s byzantine licensing requirements.

Recent scholarship across the political spectrum has highlighted the challenges presented by occupational licensing schemes, and has made clear that the burdens created by such bureaucratic requirements must be lifted.

For starters, according to the Heritage Foundation, occupational licensing requirements cost the average U.S. household a staggering $1,033 per year.[3] Even more troubling, however, are the adverse effects that licensing has on interstate mobility and the labor market itself. A new study by professors Janna Johnson and Morris Kleiner, the AFL-CIO chair of labor policy at the Humphrey School of Public Affairs at the University of Minnesota, for example, found that the migration rate of workers in occupations with state-specific licensing exam requirements was 36 percent lower than rates for other occupations.[4] By contrast, occupations with national examinations showed no evidence of such a limitation on interstate mobility.[5] Put simply, state-specific licensure makes migration more difficult by closing occupational doors for people who want to move.

In testimony before the U.S. Senate Judiciary Committee, Professor Kleiner stated that he and Alan Krueger, the former head of President Obama’s Council of Economic Advisors, calculated that licensing laws cost between a half and one percent of jobs nationally in 2010.[6] Those seemingly small percentages amount to tens of thousands of unborn jobs across America that never came into existence—a claim bolstered by research out of the Brookings Institute revealing that stringent licensing requirements result in fewer providers of the services subject to the requirements.[7] Fewer providers means fewer employers and fewer available jobs.    

Perhaps unsurprisingly, given Mr. Krueger and Professor Kleiner’s findings, the Obama Administration released a detailed report in 2015 calling for nationwide reforms to occupational licensing.[8] Echoing bipartisan support for such measures, the Trump Administration’s Secretary of Labor has since said, “Americans want principled, broad-based reform. If licenses are unnecessary, eliminate them. If they are needed, streamline them. And, if they are honored by one state, consider honoring them in your own state. Americans looking to enter the workforce deserve no less than our most ardent efforts to remove regulatory barriers so that they can have a job.”[9]  

Focusing less on national trends and more on Ohio’s own licensing concerns, The Buckeye Institute’s report, Forbidden to Succeed: How Licensure Laws Hold Ohioans Back, 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.[10] Our subsequent study, Still Forbidden to Succeed: The Negative Effects of Occupational Licensing on Ohio’s Workforce, confirmed the disturbing and stubborn fact that Ohio’s licensing requirements erect higher barriers to employment for those most in need of quality jobs: middle-aged and low-income workers, and those without a college degree.[11]

Senate Bill 255 takes several steps toward fixing Ohio’s occupational licensure problem. First, for the first time in state history, policymakers would be required to use the least restrictive regulation when displacing competition, and the bill identifies various licensing alternatives—listed from least restrictive to most restrictive—that the state could pursue if confronting a verifiable public safety risk. Second, Senate Bill 255 establishes a process for legislative panels to use when weeding through Ohio’s overgrown thicket of licensing boards. Under this process, boards that the General Assembly does not proactively reauthorize would simply dissolve. Taken together, these provisions give lawmakers a much-needed tool for uprooting bureaucratic thistles that deprive Ohioans of the potential fruits of their labor.

In addition to its sunset provisions, Senate Bill 255 also creates a “sunrise” review process to be used whenever a new licensing bill is introduced. This provision will require the Legislative Service Commission to assess the potential consequences of any new licensing legislation with respect to employment opportunities, consumer choices and costs, market competition, and costs to the government.

Every licensing requirement raises a new red-taped obstacle 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 lost productivity, hours of opportunity that young, low-income workers sorely need, but that the state continues to take for itself. 

Senate Bill 255 begins the overdue effort of reforming the state’s occupational licensing regime and ending a misguided permission slip policy that has stood in the way of growth and prosperity for far too long.

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

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