How to fix Louisiana's occupational licensing

But Louisiana stands out as one of the most heavily licensed states. The percentage of workers who need a license is the seventh highest in the country and the highest in the region. And Louisiana licenses the most low- and moderate-income professions. This is not how a state wants to stand out.

Licensing laws are passed with the goal of protecting consumers. But, in practice, occupational licensing is not very effective.

The Obama administration compiled a report in 2015, finding little evidence that licensing laws improved the quality of services. Subsequent research finds that consumers instead care about more direct measures of quality, such as online reviews, far more than occupational licensing status.

On the other hand, evidence on the cost of licensing is much more conclusive. Licensing laws increase prices for consumers. Because licensing makes it harder to enter a profession, it reduces employment by as much as 27 percent. In Louisiana, licensing reduces upward mobility by 6.6 percent and increases income inequality by 15.4 percent. Finally, because licensing laws often bar ex-offenders from licensure, recidivism goes up by nine percent.

Licensing restrictions pose real barriers for Louisiana residents. And it is worse here, because Louisiana licenses so many professions rarely licensed by other states.

The up-front costs of obtaining licensure falls particularly hard on low-income residents, who often lack the time and savings to take time off to attend training full-time. It makes entrepreneurship more costly, adding yet another layer of red tape before you can open a new business.

Over a 20-year period from the early 1990s to 2010s, Louisiana added licensing requirements for 59 low- and moderate-income professions. That was the most in the nation, and 28 more than the average state. It is safe to say that Louisiana has been an outlier.

Professions like bartender, florist, barber, locksmith and massage therapist all require licenses in Louisiana. These are the types of professions that provide an opportunity for those without a college degree to earn a comfortable living.

But licensing is not our only option. Rather than using the blunt instrument of licensing, we can tailor regulations to the specific concerns for each profession. This can reduce the costs associated with licensing, while still protecting consumers. And because the regulation is designed for each profession, it can actually protect consumers.

Louisiana has the opportunity to join the growing list of states currently reforming their licensing laws by enacting numerous reforms. Policymakers don’t need to look very far. Right next door, Mississippi passed several reforms in 2021, and should continue to serve as a model next year.

One option for reform is the Right to Earn a Living Act. This reform – already enacted in Arizona and Tennessee – would require that all licensing boards provide evidence that licensing is effective and necessary. Otherwise, licensing as a policy tool may not hold up in the court system.

Another simple reform that Mississippi already has on the books is universal recognition. With this reform, Louisiana would simply accept licenses granted by other states, making it quicker and easier for professionals to move and begin working in Louisiana.

Another way Louisiana could learn from Mississippi is implementing sunrise and sunset reviews of occupational licensing laws. These regular reviews would ensure that licensing laws protect consumers at the lowest possible cost. Creating an Occupational Licensing Review Commission, like Louisiana’s eastern neighbor, to conduct the reviews will aid the state in removing unnecessary licensing laws.

Finally, re-entry reforms would help ex-offenders re-enter society and find meaningful work, helping them reintegrate into the community. Employment after incarceration has been found to significantly lower recidivism, helping both the ex-convict and the community.

Louisiana is currently one of the most stringently licensed states, holding back the state economy and harming its residents. But that doesn’t have to be the case.

Reforms like the Right to Earn a Living Act, universal recognition, sunset and sunrise reviews, and re-entry reforms can reduce the costs of licensing and ensure right size regulations so they are no longer a burden to ordinary Louisiana citizens.

Conor Norris is assistant director and Edward Timmons is director of the Knee Center for the Study of Occupational Regulation at West Virginia University. Timmons is also a senior research fellow with the Archbridge Institute.