Free market groups are supporting an Ohio bill that would restructure how the state handles occupational licensing.
Senate Bill 255 would force the state legislature to review all occupational licensing boards over the course of five years. The legislature would be granted oversight over these boards and would require that the boards demonstrate that they are necessary. The boards would also be required to demonstrate that the regulations they issue are the least restrictive regulations possible or explain why they cannot use the least restrictive regulations possible. If the legislature fails to renew a board, then it will be eliminated.
Additionally, it would require the Legislative Service Commission to submit a report on the impact of every new board that focuses on promoting competition, increasing economic opportunities and encouraging innovation.
Matthew D. Mitchell, the director of the Equity Initiative at the Mercatus Center, told Watchdog.org that these boards are run by members of the industries that the board regulates, which often leads to the members supporting policies that keep out competition and impede the free market.
The current system is stacked in favor of special interests and against consumers, Mitchell said. Creating checks on the boards will shift the favor toward the consumers, he said.
The bill passed the Ohio Senate 24-8 with all Republicans and one Democrat supporting it. It was was referred to the Committee on Federalism and Interstate Relations, where free-market think tanks the Buckeye Institute and the Mercatus Center provided testimony last week.
“Ohioans should not have to ask the state for permission to earn a living,” Greg Lawson, a research fellow at the Buckeye Institute, said. “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.”
Lawson cited statistics from the conservative think tank the Heritage Foundation, which found that occupational licensing costs the average U.S. household $1,033 in income a year. He also cited statistics by the Humphrey School of Public Affairs at the University of Minnesota that showed that “the migration rate of workers in occupations with state-specific licensing exam requirements was 36 percent lower than rates for other occupations.”
Mitchell provided written testimony that touched on three main points: 1. That licensing creates a barrier for employment, especially for low-income Americans; 2. Licensing oftentimes does not enhance safety, but does increase prices; 3. The power of special interest groups needs to be limited.
“Licensing represents a significant and growing barrier to work,” Mitchell said in the statement. “Nationally, the share of the workforce that is required to have an occupational license has increased more than fourfold in the past 50 years. As of 2015, nearly one in five working Ohioans – 18.1 percent of the state’s workforce – was required to be licensed.”
Mitchell told Watchdog.org that licensing restrictions often “restrict supply of goods and services,” which often causes the price of goods to rise for customers. Individuals are required to spend money to fulfill licensing requirements, he said, and then prices go up, which shows no economic benefit for these policies. Additionally, he said that more competition often leads to better quality services.
Sen. Rob McColley, R- Napoleon, who introduced this bill into the Senate earlier this year, told Watchdog.org that this proposed legislation will force lawmakers to review and act on every licensing board, which will ensure that action will be taken against boards that are not useful. The earliest that a board will be reformed or renewed would be the next General Assembly, he said.
McColley said he is “very confident” that this bill will pass the House and be signed into law by the governor. Republicans have a majority in the House and the governor’s seat.