Licensing Creep

Fiscal Stability and Economic Growth Commission

Ignored Small – but Critically Important – Licensing Fees

Frank Underwood, president of the United States in the Netflix series: House of Cards” once sneered: “I just hate this small-ball crap.”

Connecticut’s big, bad, bodacious, government commission, The Fiscal Stability and Economic Growth Commission probably shared the same sentiment.  The commission boldly claimed it would “go big or go home.”

Its recently filed report, as promised, focused on big issues like, well, fiscal stability and economic growth.  However, it never once mentioned the seemingly small issue of licensing requirements.  Yet license-creep is seriously suffocating our state.

Ever expanding occupational licensing and licensing requirements is smothering labor market entry, handicapping labor mobility, and limiting economic opportunity in Connecticut – especially among minority groups.

In fact, Connecticut’s licensing of low-income professions increased from 53 percent in 2012 to 62.7 percent in 2017

In Connecticut, licensed and regulated jobs include: Massage Therapist, Sign Language Interpreter, Weigher, Fisher, Home Entertainment Installer, Locksmith, Floor Sander Contractor, Milk Sampler, Taxidermist, Pharmacy Technician, Upholsterer, and Animal Breeder[Note: 2012 data; Source: Institute of Justice] 

But it’s not so much the license itself that keeps people out – although the fees can be sizable, especially if you’re counting every dollar.  Rather, it’s the associated education and experience requirements that make it onerous and burdensome for many.  

The proliferation of licensing requirements starts with requests from special interests. It then proceeds apace with the General Assembly often accepting the need for licensure even with little or no proof or even discussion of the harm to consumers.

Not surprisingly, as with most actions of this nature, the benefits of license fees accrue to those soliciting the protection with the downside that it hurts the rest of us, and especially those who simply want to work.

Reducing and, wherever plausible, eliminating, entry burdens will result in more entry, more jobs, more income. 

Moreover, government policies that affect the creation of new businesses have a direct impact on the state’s “business climate” and the resulting firm entry and job growth it influences.  License creep points to a pliable legislature, susceptible to special interests that seek preferential treatment to improve their pocketbooks.

License creep neuters vitality and entrepreneurship in the state; it also signals the state’s poor fiscal health.

Consider a cross-section of the 50 states showing the relationship between Bureau of the Census Business Applications data – on a per capita basis- and the Percentage of 102 Lower-Income Occupations Licensed by the State shows a noticeable inverse relationship between Business Announcements and Occupational Licensing Percentage.  The chart below shows the disadvantage Connecticut faces compared to states like Colorado, Delaware and Georgia.

Another chart showing announcements of new businesses over the last 12 years shows how far Connecticut is behind Massachusetts – our most earnest competitor.

The proliferation of occupational licensing and the resulting  damaging perception of a state too eager and too willing to protect entrenched interests,  harms individual initiative, foils entrepreneurs, and curtails small business growth. 

So here is my advice:

-       Immediately launch a review of all licensing program with an eye to eliminating them;

-       Require that demonstrable and documented consumer harm be demonstrated before any new licensing legislation is undertaken; and

-       Institute a five-year sunset provision on every piece of new licensing legislation

Sometimes the small things change the game.

arodriguez@newhaven.edu