Wisconsin Reduces Licensing Fees for Nearly 75% of Licensed Occupations

Occupational licensure is one of the most overarching labor market issues facing low-income workers. The proportion of the labor force required to obtain a license exceeds that of both minimum wage earners and union members.1,2,3 The costs of licensing, such as exams, training courses, continuing education, and application and renewal fees, can present significant barriers to work, particularly for those for whom money is the tightest: Americans who are low-income, unemployed, and/or dislocated workers.  

On July 1, a new occupational licensing fee structure went into effect in Wisconsin that brought down licensing fees for 127 licensed occupations and professions—approximately 75% of all occupations and professions licensed by the Wisconsin Department of Safety and Professional Services (DSPS). An estimated 361,000 individuals who apply for or renew a Wisconsin license during the next biennium will pay a reduced fee as a result, promoting new economic activity and making it easier for low-income individuals to climb the economic ladder. Initial application fees were reduced by an average of $26.78, and renewal fees saw an average reduction of $57.42. This is approximately a 32.5% reduction in the average total fees associated with obtaining a license in Wisconsin.4

The change stems from Wisconsin Statute § 440.03(9)(a), which requires DSPS to conduct a licensing fee study every two years.5 Moreover, under chapters 440 and 480 of Wisconsin statutes, licensing fees charged to occupations and businesses under the department’s authority must be at cost.6,7 That is, licensing fees must not exceed the approximate administrative and enforcement costs of regulating those occupations and professions. According to DSPS, the new fees are projected to provide sufficient revenue to cover existing operating expenses and afford the department the ability to maintain staffing levels that will ensure customer service remains a top priority. 

Fee changes of this magnitude have not occurred in Wisconsin since the 2009-2011 biennium. This most recent fee study was the first to utilize new data on the costs associated with administering occupational licenses that is more accurate and detailed than what was previously available. As a result, the department was able to make more precise estimates of operating costs and thus usher in the first major overhaul of licensing fees in a decade.  

“Thanks to technology integration and advancements, the department can better manage resources needed to regulate professional licenses and credentials while passing on those savings to our customers,” said DSPS Secretary Dawn B. Crim. “Lowering financial barriers for people who enter these professions for the first time as well as making the renewal process more affordable promotes economic growth and stability while protecting the citizens of Wisconsin who rely on these professional services.”

Wisconsin is one of 16 states chosen to participate in the National Occupational Licensing Learning Consortium, which is a multi-year program coordinated in part by The Council of State Governments that explores ways to reduce unnecessary barriers to labor market entry and streamline licensing processes. The other states selected are Arkansas, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Kentucky, Maryland, Nevada, New Hampshire, North Dakota, Oklahoma, Utah and Vermont.

Sources

  1. U.S. Bureau of Labor Statistics. (2018). Data on certificates and licensing. Retrieved from https://www.bls.gov/cps/cpsaat49.pdf
  2. U.S. Bureau of Labor Statistics. (2019). Characteristics of minimum wage workers, 2018. Retrieved from https://www.bls.gov/opub/reports/minimum-wage/2018/pdf/home.pdf
  3. U.S. Bureau of Labor Statistics. (2019). Union Members – 2018. Retrieved from https://www.bls.gov/news.release/pdf/union2.pdf
  4. Carpenter, D. M., Knepper, L., Sweetland, K., & McDonald, J. (2017). License to Work: A National Study of Burdens from Occupational Licensing 2nd Edition. Arlington, VA: Institute for Justice. Retrieved from http://ij.org/wp-content/themes/ijorg/images/ltw2/License_to_Work_2nd_Edition.pdf
  5. Wis. Stat. § 440.03. Retrieved from http://docs.legis.wisconsin.gov/statutes/statutes/440/I/03/9/a
  6. Wis. Stat. § 440. Retrieved from https://docs.legis.wisconsin.gov/statutes/statutes/440
  7. Wis. Stat. § 480. Retrieved from https://docs.legis.wisconsin.gov/statutes/statutes/480

New Kentucky Law Streamlines Occupational Licensing for Military-Affiliated Professionals

On March 26, Kentucky Gov. Matt Bevin signed HB 323, which will improve occupational licensure portability for veterans, military spouses, and National Guard and Reserve members.1 The bill will require administrative bodies that issue occupational licenses and other regulatory authorizations to endorse and license any applicant that is a member of the National Guard or Reserves, a veteran, or the spouse of a veteran or military member, provided he or she possesses or recently possessed an equivalent license in another state.

The out-of-state license will not be considered for recognition if the license has been expired for more than two years; the license has been revoked for disciplinary reasons or is otherwise not in good standing; or if the applicant demonstrates a substantive deficiency in training, education or experience that could pose a health or safety risk to the public.

While well-intentioned, occupational licensure has been linked to some unfavorable economic effects, such as increased unemployment, higher prices and muted geographic mobility.2,3,4 With over 25 percent of U.S. workers possessing a license, the ubiquity of occupational licensing can exacerbate the difficulty job seekers with military affiliation already have in securing employment.5

According to the U.S. Department of Labor, various military occupations offer training and experience in skills that are applicable to at least 962 disparate civilian occupations.6 Nevertheless, veterans routinely cite obtaining employment as one of the most challenging aspects of transitioning to civilian life.7 Occupational licensing regulations can magnify this difficulty when states fail to recognize out-of-state licenses and disallow applicants to use military experience and training in lieu of civilian credentials to fulfill licensing requirements. 

Spouses of military service members are particularly disadvantaged by licensing due to their propensity to work in tightly regulated industries (e.g., education, nursing and child care) and their frequent relocation across state lines.8 Specifically, military spouses are ten times more likely to have moved across state lines in the past year relative to their civilian counterparts.8 Because licensing procedures are largely determined by boards at the state level and can vary considerably, military spouses seeking to maintain licensure throughout geographic relocation can face substantial encumbrances.

The Kentucky bill should help alleviate some of these issues faced by veterans, military members and their spouses. By requiring licensing boards to endorse out-of-state licenses for military-affiliated applicants, the monetary and time costs of licensure are markedly reduced, potentially providing more employment opportunities for veterans, military members and especially their spouses.

Other states have taken similar legislative action to try to remove barriers to work for military-affiliated individuals seeking licensure. Alabama HB 388 (2018), which was signed last year, requires licensing boards to endorse military spouses licensed in another state with equally or more rigorous licensing standards.9 The bill also contains a provision that creates a temporary license for applicants from states with less stringent licensing requirements.

Vermont H 906 (2018) went into effect last year and sought to reduce the amount of redundant retraining members of the military must undergo to be eligible for a license.10 To that end, the bill credits members of the military with civilian experience and training for comparable military credentials.

As states continue to reassess their occupational licensing framework for unsound and overly burdensome provisions, a focus on reducing inefficient barriers and fostering license portability for veterans and military families is an important component that can ensure both efficient labor market utilization and public safety.

Sources

  1. Kentucky General Assembly. HB 323: AN ACT relating to reciprocal occupational licensure for members of the United States military, reserves, National Guard, veterans, and their spouses. 2019. Retrieved from https://apps.legislature.ky.gov/recorddocuments/bill/19RS/hb323/orig_bill.pdf
  2. Blair, P. Q., & Chung, B. W. (2018). How Much of Barrier to Entry is Occupational Licensing? (No. w25262). National Bureau of Economic Research.
  3. Kleiner, M. M., Marier, A., Park, K. W., & Wing, C. (2016). Relaxing occupational licensing requirements: Analyzing wages and prices for a medical service. The Journal of Law and Economics, 59(2), 261-291.
  4. Johnson, J. E., & Kleiner, M. M. (2017). Is Occupational Licensing a Barrier to Interstate Migration? (No. w24107). National Bureau of Economic Research.
  5. U.S. Bureau of Labor Statistics. (2018). Data on certificates and licensing. Retrieved from https://www.bls.gov/cps/cpsaat49.pdf
  6. U.S. Department of Labor. 2014. PILOT STUDY Translating Military Skills to Civilian Employment. Retrieved from https://wdr.doleta.gov/research/FullText_Documents/Pilot_Study_Translating_Military_Skills_to_Civilian_Employment_Acc.pdf
  7. Iraq and Afghanistan Veterans of America (2019). 2019 Member Survey. Retrieved from https://cultureondemand.com/iava-2019/
  8. U.S. Department of the Treasury and U.S. Department of Defense. 2012. Supporting Our Military Families: Best Practices for Streamlining Occupational Licensing across State Lines. Retrieved from http://archive.defense.gov/home/pdf/Occupational_Licensing_and_Military_Spouses_Report_vFINAL.PDF
  9. The Alabama Legislature. HB 388: Military Family Jobs Opportunity Act. 2018. Retrieved from http://alisondb.legislature.state.al.us/ALISON/SearchableInstruments/2018RS/PrintFiles/HB388-int.pdf
  10. Vermont General Assembly. H.906 (Act 119): An act relating to professional licensing for service members and veterans. 2018. Retrieved from https://legislature.vermont.gov/Documents/2018/Docs/ACTS/ACT119/ACT119%20As%20Enacted.pdf

Florida Gov. Ron DeSantis Holds Occupational Licensure “Deregathon” in Orlando

Seeking to survey Florida’s occupational licensing regulations for unreasonably onerous provisions, Florida Gov. Ron DeSantis recently held a one-day “Florida Deregathon” workshop at Valencia College in Orlando.

Seventeen of Florida’s 23 licensing boards had representatives in attendance to respond to the challenge posed by DeSantis in his invitation letter to the event: “Our expectation is that each board arrives prepared to roll-up its sleeves, discuss, debate, identify and recommend substantive regulations that can be targeted for immediate elimination,” wrote the governor. “We know that small business is the engine that drives Florida’s economic success. And yet unreasonable and needless regulations create a drag on our economic growth, stifle competition and keep hard working Floridians out of the labor pool.”1

The regulatory intent of occupational licensure is to safeguard the public from incompetent practitioners and foster information symmetry between consumers and producers. However, occupational licensure has faced contempt from both politicians and theoretical economists over the years, contending that it needlessly inhibits economic activity by stifling market entry into occupations, driving up prices, and discouraging geographic relocation for work.

Indeed, the data suggests this phenomenon is realized in the real world. A recent National Bureau of Economic Research working paper found that occupational licensure reduces labor supply by an average of 17 to 27 percent.2 The result of this is forgone wages and tax revenue. This indicates that, provided adequate public protection is maintained, shrewd occupational licensing reform could bring these unrealized benefits to fruition, increasing the welfare of society.  

While the Florida board members were not expected to hold any official votes at the workshop, a host of prospective amendmentsaimed at reducing these harmful effects were discussed. The most prevalent included lightening continuing education, experience, and training requirements; reducing application fees and exam costs; extending renewal periods; and employing more generous recognition of out-of-state licenses.3

Similar measures have been the focus of recent, albeit largely unsuccessful, legislative efforts in Florida. Spearheaded by State Rep. Carlos Guillermo Smith, House Bill 1413 (2018), which died in subcommittee last year, would have instituted a two-year temporary endorsement of Puerto Rico licenses and certifications for migrants from the U.S. territory, many of which evacuated following Hurricane Maria in 2017.4

House Bill 15 (2018) sought more sweeping reform. The bill, which was passed by the Florida House of Representative but never made it out of the Senate, would have substantially diminished required training hours for licensees and outright repealed licensure for various occupations.5

House Bill 615 (2017) was one of the few legislative successes on this front, having been enacted in 2017. The bill emphasized licensure portability by allowing military members, spouses, and surviving spouses to obtain licensure in Florida, provided they are licensed in another state.6

The proliferation of occupational licensure in the U.S. has encouraged states to review best practices and evaluate the efficacy of existing regulations. CSG has played an instrumental role in facilitating this process. In 2017, CSG in partnership with NCSL and NGA launched a three-year project titled Occupational Licensing: Assessing State Policy and Practice. The aim of the undertaking is threefold: to help states improve their understanding of occupational licensure issues and best practices; identify current policies that create unnecessary barriers to labor market entry; and create an action plan that focuses on removing barriers to labor market entry and improves portability and reciprocity for selected occupations.

The “Florida Deregathon” event is another example of the growing appetite among states for reassessing their occupational licensing framework and increasing their commitment to ensuring that licensing provisions meaningfully protect the public, not gratuitously hinder economic productivity.

Sources:

  1. Governor Ron DeSantis Announces “Florida Deregathon” Event. January 2019. Retrieved from https://www.flgov.com/2019/01/24/governor-ron-desantis-announces-florida-deregathon-event/
  2. Blair, P. Q., & Chung, B. W. (2018). How Much of Barrier to Entry is Occupational Licensing? (No. w25262). National Bureau of Economic Research.
  3. Florida Deregathon. January 31, 2019. Retrieved from https://static1.squarespace.com/static/598a8562f43b55981f9a2f5a/t/5c59adfeec212d5c93d55734/1549381119220/DBPR+-+Deregathon+Power+Point_PDF+Version.pdf
  4. Florida State Senate. HB 1413: Temporary Licensure and Certification. 2018. Retrieved from http://www.flsenate.gov/Session/Bill/2018/1413
  5. Florida State Senate. HB 15: Deregulation of Professions and Occupations. 2018. Retrieved from https://www.flsenate.gov/Session/Bill/2018/00015/Category
  6. Florida State Senate. HB 615: Professional Regulation. 2017. Retrieved from https://www.flsenate.gov/Session/Bill/2017/615