Modest Reforms Demonstrate Need for Complete Overhaul of Arizona Licensing Laws

Institute for Justice Continues to Work for Economic Liberty for All Arizonans

Tempe, Az.Today, Gov. Doug Ducey signed HB2613, which enacts modest changes to Arizona’s occupational licensing laws. The Institute for Justice worked with the Governor’s Office and legislators to enact HB2613 and other reform legislation. Although HB2613 contains some meaningful reforms, it demonstrates just how much work remains to protect people’s ability to earn an honest living. IJ will continue these efforts next legislative session to protect consumer choice and entrepreneurs and workers whose livelihoods are threatened by pointless, overreaching and unnecessary government regulation.

HB2613 eliminates occupational licensing for citrus packers, assayers, non-commercial motor-vehicle driving instructors and yoga-teacher instructors. It also limits the exclusive scope of practice of cremationist licensing, allowing new entry-level workers to go to work, and creates an alternative license for geologists. In addition, it mandates a study relating to the transfer of all non-health regulatory boards and occupational licenses issued by state agencies to a new licensing and regulatory division in the state Department of Administration.

HB2613 originated with Gov. Ducey’s January State of the State address. In that address, he recognized that Arizona desperately needs to reform—and eliminate—barriers to entrepreneurship, especially its occupational licensing schemes, and called upon the Legislature to begin that process. A 2012 report by the Institute for Justice, License to Work, ranked Arizona as the “most broadly and onerously licensed state for low- and moderate-income workers.” Out of the 102 occupations IJ studied, Arizona mandates a license for 64. On average, a license requires $455 in fees, 599 days of training and education and passing two exams.

“Occupational licensing has exploded in recent years,” said Tim Keller, managing attorney for the Institute for Justice’s Arizona Office. “Back in the 1950s, only one out of every 20 American workers needed a license to do their jobs. Today, that number is one in four.”

The need to reform occupational licensing laws is a bipartisan issue: Both Gov. Ducey’s administration and President Barack Obama’s economic advisors have called for reform. As explained in a recent White House report, there is increasing recognition that many occupational licenses do not protect the public, but instead enrich industry insiders. And the threats to consumers and workers are only magnified when these licensing laws are enforced by industry insiders on self-interested regulatory boards, as the U.S. Supreme Court ruled just last year in North Carolina State Board of Dental Examiners v. Federal Trade Commission.

“If you want to learn about cronyism and the growth of government, just spend some time at the Capitol,” said IJ Senior Attorney Paul Avelar. “HB2613 was opposed by an endless stream of industry insiders and their lobbyists—even the lobbyist for the regulatory boards association opposed it—because they stand to lose their monopolies and their power. Given this dynamic, it is promising when even incredibly modest, common sense reforms like HB2613 get adopted.”

By imposing additional requirements on people seeking to enter licensed professions, licensing can reduce total employment in the licensed professions and diminish employment opportunities and wages for excluded workers. This stifling of competition not only harms consumers, it particularly harms low-income, minority and older job seekers, as well as military spouses, as these groups often lack the resources to obtain licenses.

“IJ has been suing Arizona for years over its occupational licensing schemes,” explained Keller. “We have helped many Arizona entrepreneurs overcome protectionist schemes, including hair braiders, eyebrow threaders, landscapers and others. We have worked with lawmakers to protect others, including makeup artists. Arizona needs to be more proactive in protecting the economic liberty of all Arizonans.”

A case that IJ is currently litigating against the Arizona State Veterinary Medical Examining Board demonstrates the real-world effects of licensing schemes enforced by self-interested boards. IJ represents Celeste Kelly, Grace Granatelli and Stacey Kollman, three Arizona entrepreneurs who decided to turn their love of animals into successful businesses. Each spent hundreds of hours learning about animal anatomy and developing massage techniques to obtain private certifications in animal massage.

But the Board—which is controlled by veterinarians—ordered animal-massage therapists to stop or face potential jail time and thousands of dollars in fines. The Board declared that only veterinarians could perform animal massage, even though human-massage therapists are not required to become doctors before practicing their craft.

“HB2613 is only a first step,” said Avelar. Arizona continues to license far too many safe occupations. Lawmakers need to build on today’s success to further protect economic liberty and allow Arizonans to do honest work to support themselves and their families. IJ will continue to work with the Governor and Legislature on reforms, and will continue to litigate to protect economic liberty when the government fails to do so.”

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