Income Inequality and Occupational Licensing

Occupational licensing keeps the poor poor and makes the rich richer, and the only rational way out is less government, not more.

Tinnitus Among RI’s Would-Be Overlords

Calling Aaron Regunberg an “overlord” (at least in intention) is not a dog whistle; it’s more like a game of name that tune.

Pick a Side of the Plate

Sabitoni’s Slippery Statistics to Justify Loose Rhetoric

If Laborers union rep Michael Sabitoni wants to accuse the Center of wanting people to die, perhaps he should be a little bit more thoughtful with his numbers.

Time to Reduce Burdensome Regulations

No Correlation Between Stopping People from Working and Safety

Let Companies Do What Works for Their Employees

Pushing for Occupational Licensing

The RI Center for Freedom & Prosperity has today released a media and information page and an initial brief supporting reform of occupational licensing laws and other regulations.  From the second link:

Rhode Islanders Dream, Too. The right to earn a living in the profession of one’s choice without government interference is fundamental to each person’s freedom to fulfill his or her individual dreams and goals. In making Rhode Island a less friendly place to call home for Americans looking to fulfill a lifelong dream, to raise a family, and to build a career, our state government restricts that right by forcing too many of its residents to seek its permission and to overcome burdensome and costly barriers before engaging in meaningful work.

In a comprehensive national analysis of occupational licensing barriers for low-to-middle-income workers and aspiring entrepreneurs, a 2017 Institute for Justice report ranked Rhode Island among the 10 most widely and onerously licensed states. Already suffering bottom 10 rankings on the Family Prosperity Index (FPI), overall business climate, and on Jobs & Opportunity Index (JOI), Rhode Islanders should be provided with every opportunity to engage in gainful work.

Unfortunately, Rhode Island is becoming less of a “home of the free” and more of a “land that requires permission.” For many, the costly fees and training mandates that are irrationally and unfairly imposed on certain occupations presents an insurmountable barrier to engaging in a new profession. As one factor in its bottom 10 FPI ranking, the lack of opportunity to engage in prosperous work has forced tens of thousands of Rhode Islanders to move out of state, bringing with them billions of dollars of income earning potential.

Rhode Island’s dismal business climate, because of excessively high levels of taxation and regulation, keeps our state uncompetitive on a regional and national basis. Especially hard hit are low-income occupations for which earning a primary or secondary income is vital to family self-sufficiency.

Solving Our Economic Problems

An Indictment of Bureaucracy in a Silver Lining

Leveraging the inefficiency of government to create incentives for good behavior is brilliant, but only highlights how backwards we’ve gotten things.

The Unhealthy Restrictions of Being the 3rd Worst State for Zoning

When it comes to national rankings, those that show Rhode Island badly on the wrong side abound.  Ted Nesi highlights another one, on WPRI:

Rhode Island has some of the most restrictive regulations for land development in the country, which is likely raising the cost of housing in the state, according to a recent study.

The study by Vanessa Brown Calder, a researcher at the libertarian-leaning Cato Institute think tank, ranked Rhode Island as the 3rd most restrictive state for zoning regulation and the 8th most restrictive for land-use regulation.

“These constraints on land development within cities and suburbs aim to achieve various safety, environmental, and aesthetic goals,” Calder wrote. “But the regulations have also tended to reduce the supply of housing, including multifamily and low-income housing. With reduced supply, many U.S. cities suffer from housing affordability problems.”

Progressives tend to look at housing affordability as a welfare issue, because they generally like the idea that government can tell people what they can, can’t, and must do with their property.  The solution, for them, is to use government’s power to take people’s money in order to transfer it to those whom them zoning regulations lock out of housing.  Naturally, this has the advantage of requiring everybody to go to government for benefits and permissions, as well as creating that money-power funnel I mentioned yesterday.

But immobilizing people in this way is not healthy, whether by making it difficult for them to find new homes or layering government forms on them whenever they do move.  Beyond simply the principle of freedom is its practical value.  Allowing people to move from place to place and adapt their homes (whether by price or by function) creates opportunities for them that benefit society as a whole, especially when it comes to the economy.

Hypocrisy and Tragedy in Occupational Licensing

Overriding “pox on both their houses” equivalence in economic philosophy is the reality that occupational licensing protectionism harms vulnerable people.

Not All Regs Are Created Equal

Airport Pickups an Early Question of a Gig Economy

For the Providence Journal, Jim Hummel has an article and video report on T.F. Green’s minimum charge for short-term parking and requirement for ride-sharing drivers (from, e.g., Uber and Lyft) to pick up in that lot:

Taking the statements of everybody in the report at face value, there are certainly two sides to the story.  The airport has to operate on its own revenue, and ride-sharing is eating into that revenue, so the money has to come from somewhere.

That said, accommodations could surely be found so that ride-sharing drivers could pick up closer to the door and under shelter.  The fee for pickups is a matter of negotiation, but convenience is a matter of protectionism.

Moreover, these are questions that we’re going to have to figure out how to answer, because technology is going to keep disrupting old arrangements like exclusive access for a single taxi company.

Are We Trying to End a Positive Trend?

The story of vaping in schools has appeared in a number of places in the past few days. Here’s Jessica Picard reporting in the Valley Breeze:

“Our concern is that we are seeing an increasing trend in vaping. We thought it was important that we share with parents what we are seeing,” said Supt. Robert Mitchell.

Increased use of e-cigarettes is not just in the high school, but in the middle schools as well, said school officials.

According to the Centers for Disease Control and Prevention, current use of electronic cigarettes increased among middle and high school students from 2011 to 2016. The CDC reported that in 2016, about four out of every 100 middle school students and 11 out of every 100 high school students said they had used e-cigarettes in the past 30 days.

In isolation, this may indeed be a bad thing, but that’s not how we should look at it.  According to the federal Department of Health & Human Services, “from 2011 to 2015, the percentage of 12th-grade students who had ever used an e-cigarette increased from 4.7 to 16 percent.”  But over that same period of time, the percentage of seniors who said the same about actual cigarettes decreased from 10.3% to 5.5%.  Smokeless tobacco (like snuff and chewing tobacco) is down from 8.3% to 6.1%.  (These groups aren’t exclusive, meaning that there’s some overlap between them.)

As of 2014, more students had used an e-cigarette than an actual cigarette.  The question that the advocates and (in turn) the journalists miss is this:  If the alternative to e-cigarettes is not nothing, but smoking or chewing tobacco, isn’t this outcome positive?

Looking at the trend for teenage smoking, the line is down, down, down since the mid-90s.  That’s what one would expect as the rules and social pressure have changed.  When I was a high school smoker back then, we were still able to go out to the smoking area behind the library.  No doubt as that convenience decreased, fewer kids bothered.

It could be that some percentage of teenagers will simply do something “adult” and addictive like smoking.  It’s probably better to allow that to be something like smoking, rather than smoking itself.

A Business Regulation Reform Suggestion

An Obvious Solution to Economic Malaise

Limiting the Right to Prohibit

The idea that anti-nicotine activists have a right to ban products that might benefit the nicotine industry relies on speculation and an unhealthy understanding of the boundaries of a representative democracy.

Progressive-Left Continues To Live In Their Land Of Make-Believe

In the progressive land of make believe, the political class believes that it is their responsibility to right every perceived wrong. In the real world, the unintended consequences of progressive policies are strangling us.

Our Decline Is Now Our Choice

The frustrating thing about assessments like this from Joel Kotkin is that Rhode Island’s decline is entirely its own decision:

Today, the often-disdained red states have the wind at their back, while in blue America, the economy seems to be slowing, as industries and people move to lower-cost, lower-regulation states. Seven of the top 10 states in terms of population growth last year were deep red; overall, the South has become home to the better part of economic dynamism in the country, with Texas and Florida alone accounting for one-third of all U.S. growth since 2010. Some analysts suggest that the new tax law, which works against high-income earners in high-tax states, will accelerate these trends further.

We could easily construct our economic policy — mainly taxes and regulations — in a way that would make Rhode Island the beacon of the North.  Just give people a place in which to conduct their lives and their business, and they’ll come here to do it.

Real Diversity Needed on Licensing Boards

According to Heidi Hall, of Vanderbilt University, states are facing increased risk of lawsuits following a Supreme Court case, North Carolina State Board of Dental Examiners v. Federal Trade Commission:

Allensworth compiled a list of 1,790 state boards. Eighty-five percent of the boards have rules that result in most of the board members selected to serve being active in the same profession the board regulates.

“The dark side of occupational licensing – its tendency to raise prices to consumers with dubious effects on service quality, its enormous payout to licensees and its ability to shut many willing workers out of the workforce – has begun to receive significant attention,” Allensworth said.

Basically, if licensing boards consist overwhelmingly of members from within the profession, they’ll be subject to lawsuit based on their self-interest in controlling the flow of competition.  In the case of the North Carolina dentists, six of the eight members were required to be dentists, themselves.  Rhode Island’s Board of Barbering and Hairdressing, for another example, requires six of the seven members to be barbers or hairdressers.  That leaves only one vote on the board with no immediate financial interest and, therefore, no incentive to make the rules challenging for potential competition.

Licensing as Legalized Racketeering

Writing in the American Spectator, Jon Cassidy likens government’s occupational licensing regimes to racketeering:

Racketeering is a multifarious concept, but when the word was coined in 1927 by the Employers Association of Chicago, it referred specifically to tradesmen who had banded together to artificially drive up the cost of their services. The employers group wanted the authorities to crack down on crooked laundry and building trades, among others, but in the long run, the trades won by subverting and perverting the power of the government. It’s easy enough to picture the old noir films with cops on the take, doing the mob’s bidding, but this corruption was of a less glamorous, more insidious sort.

That lead-up reminds me of my response when people attempt to quantify government corruption in order to claim that Rhode Island isn’t that much of an outlier.  The problem is that we’ve essentially made corruption legal, and with deteriorated social norms around inside dealing, the word “corruption” is useless if it must involve something illegal.

Politically Correct Anti-Tobacco Regs: How Many People Might Die Because They Were Denied a Less Harmful Choice?

Better something that is less harmful than more harmful. But to some, innovative new products that reduce health risks – should be banned. In the tobacco and nicotine industry, the politically-correct anti-tobacco movement is advocating for the suppression of individual rights and elimination of less harmful choices, via restrictions and outright bans on products that could improve public health.

Corporate Decisions in Two Different Worlds

Jobs Lost to Regulation

Katie Wendell’s article on occupational licensing in Ohio brings to mind questions about Rhode Island:

Ohio lawmakers are considering changes to some requirements amid concerns that over-regulation is keeping some people — including many from the generation most apt to leave the state — from gaining employment.

“Ohio’s licensing requirements have prevented more than 7,000 people between the ages of 25-45 from pursuing licensed occupations in the state,” says a new study by the Buckeye Institute, a conservative think tank.

I don’t think it’s so much a generation that might leave as a class, which I’ve called the “productive class.”  (Again, that description is meant to distinguish from, say, an “investor class” or “student class,” not a “lazy class” or something.)

I do wonder what the Buckeye Institute’s model would find Rhode Island’s job prevention number would be.  According to the Institute for Justice, Rhode Island has the 10th most burdensome licensing laws for low-to-middle-income occupations, compared with Ohio’s 38th.

Locking People Out with an Explosion of Regulation

The topic of occupational licensing has been trending, lately, and Nila Bala adds this on The Hill:

Nearly one out of three Americans has a record in the criminal justice system and, as a result, faces a difficult road to becoming employed. Adding to their woes is the fact that many jobs — including interior designer, barber, pest control applicator and fire alarm installer — require some kind of occupational license.

Unfortunately, many states still deny licenses for individuals with criminal convictions, even when those convictions are decades old or relatively minor. The good news? Several states and cities across the country are poised to become leaders in reforming the law.

The number of jobs requiring occupational licenses has ballooned in the last 50 years. Occupational licensing has expanded from covering five percent of the workforce in the 1950s to 30 percent today. In recent years, occupational licenses have come under fire for creating unnecessary barriers to work without any measurable gains in safety or quality of services provided to the public.

Of course, one could argue that the mix of jobs has changed in the last half-century, but somehow people got along without government oversight of a big chunk of the economy in the past.  It isn’t clear that the benefits of all this regulation outweigh the costs, or even have substantial benefits looking only at that side of the ledger.

The Benefits of Letting People Figure Out How to Live

What strikes me most about Jonathan Tobin’s thoughts on the benefits of the recent change in federal economic policy is how easily Rhode Island could take the same approach:

What’s even more astonishing is that as the story’s headline concedes, this impending boom is being directly caused by “The Trump Effect.” American businesses aren’t, as The Times points out, merely happily anticipating the cut in corporate tax rates provided by the reform bill passed last month by Congress. What’s really fueling the upturn, according to The Times, is “the Trump administration’s regulatory pullback.”

Despite the widespread consensus in the mainstream media that the administration has been a disaster on all fronts, Republicans have often singled out regulatory reform as a highlight of Trump’s first months in office. Liberal economists have dismissed this assertion as nothing more than a talking point to reassure Republicans that Trump was, despite his populist tone, trying to govern like a conservative. But, as The Times report points out, the impact of his orders to cut back on regulations that hamstring businesses is real.

Since business leaders are reassured that not only will many Obama-era regulations be cut back, but also that no new arcane rules will be implemented in the next few years, they’re able to plan with confidence. That means more investment, more jobs, and ultimately higher wages for workers in a trifecta that appeals to both big business and also to the needs of the working class voters who were responsible for electing Trump last year.

Government promises security and (somebody’s vision of) fairness as it takes control of the economy.  But when it comes to regulations, its incentive is always to do more than is necessary for a stated policy goal, and the restrictions and uncertainty it places on people who operate businesses do real harm.

In life, we do things like eat healthy, exercise, and visit doctors regularly in order to allow us to live.  When it comes to government regulation, we tend too much to allowing officials to tell us how to live for our own good — or rather, how to live for the good of whomever the government prioritizes.

Licensing Puts Us at the Mercy of Legislators and Bureaucrats

Eric Dexheimer, staff writer for the Austin American-Statesman, relates the story of Shayne Gatlin, who made the dumb decision as a teenager to agree to drive the getaway car for his friends after they broke into a house.  Some years later, he took up the trade of locksmith, and over 30 years, he has built up a solid reputation and stellar Better Business Bureau rating.

In 2004, however, his home state of Texas began licensing locksmiths, which presented him no problem, beyond the embarrassment of disclosing his record, until he recently had to supply a digital fingerprint under a new rule:

That appears to have set into motion a mandatory new review of his background, said Steve Thornton, Gatlin’s attorney. But rather than acknowledging Gatlin’s long and clean track record, court records show, the Private Security Program instead treated him as a new locksmith applicant. That meant applying an inflexible rule it had adopted in 2014 stating that any applicant with a house burglary conviction, no matter how long ago it occurred, was to be rejected.

The public can disagree about the appropriate rigidity of the law for professionals working in home security, but Gatlin’s story illustrates an important point:  When you need the government’s permission to work, you’re constantly at their mercy.  The rules can change arbitrarily and a single decision — made by legislators or bureaucrats who are too confident in their ability to foresee every consequence — can wipe out your entire life’s work.

Returning to the Rule of Law and Consent of the Governed

A recent Wall Street Journal editorial applauded the work of the Trump administration in its “great rules rollback”:

The results have been impressive. Ms. [Neomi] Rao [of the White House Office of Information and Regulatory Affairs] reported this month that through Sept. 30 the Trump Administration had taken 67 deregulatory actions but only three new significant regulatory actions. That’s a 22 to 1 ratio. She also reported that since fall 2016 more than 1,500 planned regulatory actions have been withdrawn or delayed. For fiscal 2018, the current agenda includes 448 deregulatory actions and 131 regulatory actions, a better than 3 to 1 ratio.

One reason for success is forcing agencies to abide by the Administrative Procedure Act, which outlines a public comment period for proper rule-making and which the Obama Administration routinely ignored.

Imagine government following its own rules!  After eight years of Obama, that feels new and refreshing — as if we have the rule of law and the consent of the governed (or are moving back toward it).

In recent weeks, I’ve been noticing a number of Trump skeptics come around (which is to say, people more skeptical than I was, which was pretty skeptical).  The reevaluation is justified, and minds ought to be changing across the political spectrum, not the least for reasons like this:

… the far larger impact is lifting the pall of government hassle and arbitrary enforcement from business. In the Obama era, CEOs never knew when or how a federal agency might strike for political reasons, no matter the law. Simply lifting that constant fear has had a liberating effect on risk-taking and investment.

  • No products in the cart.