Last fall, nearly half of a YouGov poll respondents said America's economic system works against them. A year prior, a Reuters/Ipsos poll revealed 72 percent of Americans believed the economy was "rigged to advantage the rich and powerful" and 54 percent felt it was getting harder to get ahead in America. While the blame is usually pinned on the wheeling and dealing between lobbyists and politicians in Washington, much of the problem occurs closer to home.
Case in point: Occupational licensing laws that require would-be workers to get approval from the state government before practicing their chosen profession. In Colorado, the average license requires $344 in fees, 260 days of education and experience, and a couple of exams, according to an Institute for Justice study that looked at licensing requirements for low-income professions nationwide.
For unemployed or impoverished Coloradans, this poses a significant barrier to opportunity and personal advancement.
At the same time, occupational licenses pay off for a privileged few by enhancing the exclusivity of some professions. A study by Morris Kleiner, a professor at the University of Minnesota, and Evgeny Vorotnikov, a senior economist at Fannie Mae, found that licensing provides an 11 to 23 percent wage boost for the highest 30 percent of earners. They noted that this suggests "licensing exacerbates relative income inequality."
What's more, many occupational licenses do little to protect consumers or advance public health and safety - common justifications for the practice.
This is evident in the wide licensing discrepancies from state to state. A 2015 Obama administration report found that more than 1,100 occupations are licensed in a least one state but fewer than 60 are regulated in every state. That means most licensed occupations are safely practiced unlicensed in at least one state.
The illogical requirements from one occupation to the next also call public safety claims into question. In the Centennial State, an emergency medical technician, who can be the difference between life and death for a sick or injured person, needs about 35 days to meet the education requirement. Meanwhile, the requirement for barbers is 10 times that amount, 350 days, and cosmetologists 420 days.
In an age when Google and Yelp empower consumers with reviews and background information for service providers in every field, these burdensome licenses seem obsolete. So, why do they persist?
"If you really want to know the real function of licensing all these occupations, all you have to do is go and see who goes down to the state Legislature to lobby in favor of licensing," said economist Milton Friedman. "It is always the plumbers or the beauticians or the morticians . There isn't any occupation you can name which hasn't been down at the state house trying to get licensure."
Licensing boards protect industry players from unwanted competition. Most boards are made up of active market participants who have a vested interest in making it harder for potential competitors to break into the business. That hurts consumers. The Obama administration's report said licensing's impact on consumer prices was unequivocal and found that "significantly higher prices accompanied stricter licensing."
But now hope is on the horizon for Colorado workers and consumers. State Sen. Don Coram recently introduced the Colorado Right to Earn a Living Act, which would lift burdensome and unnecessary occupational licensing requirements by compelling government agencies to show that a "requirement is demonstrably necessary and narrowly tailored to address a specific, legitimate public health, safety, or welfare objective." The bill would also require every agency to conduct a comprehensive review, by July 2019, of all occupational regulations to determine if they satisfy these new requirements, and if they do not, to change or eliminate them.
Getting rid of barriers to employment is an effort with bipartisan appeal. And passing this bill is one big step Colorado can take toward unrigging the economy and making it easier for hardworking people to get ahead in our state.
Jesse Mallory is the Colorado state director of Americans for Prosperity.