ST. PAUL – Senator Chris Gerlach (R – Apple Valley) and Representative Keith Downey (R – Edina) today announced the introduction of a bill that would help create jobs by allowing people to pursue a lawful occupation free from unnecessary regulations, as well as protect against the misuse of occupation regulations to reduce competition and increase prices to consumers.
In Minnesota, the reduction in the number of service providers results in residents paying more than $3.6 billion more for services a year to those with occupational licenses with little evidence of consumer protection.
“This legislation recognizes that unnecessary licensing laws are often bad for Minnesotans. This type of licensing reduces jobs. Converting licensing laws to less restrictive regulations, like certification, could stimulate over 15,000 new jobs in Minnesota,” said Morris Kleiner, a leading scholar on occupational regulations and professor of labor policy at the Hubert H. Humphrey School of Public Affairs at the University of Minnesota.
Kleiner added that licensing costs consumers more than $100 billion a year worth of lost output while transferring $300 billion a year from consumers to those who work in the licensed occupations. “This is because licensing laws reduce competition and allow licensees to increase wages by about 15 percent with no observable benefit to consumers. Here in Minnesota, the reduction in the number of service providers results in residents paying more than $3.6 billion more for services a year to those with occupational licenses with little evidence of consumer protection.”
Lee McGrath, legislative counsel for the Minnesota Chapter of the Institute for Justice, agreed: “Misguided licensing laws are a wolf in sheep’s clothing; they are designed to devour the competition while looking nonthreatening.”
“What they do is limit consumer choice, drive up consumer prices and make it harder for would-be entrepreneurs to enter the marketplace. If you want to protect consumers, vigorously enforce existing laws against fraud, but don’t limit entry in to the marketplace, especially by imposing academic tests that often have nothing to do with the services provided,” McGrath said. “The best protection for consumers comes from a competitive marketplace where they have a wide range of choices, rather than from politically-powerful special interests whose goal is blocking competition through licensing laws and appointments to licensing boards.”
Converting licensing laws to less restrictive regulations, like certification, could stimulate over 15,000 new jobs in Minnesota.
Senate Chief Author Chris Gerlach, chairman of the Senate Commerce & Consumer Protection Committee, said consumers never lobby for licensing laws. Rather, “industry insiders use the false cover of consumer protection to get laws enacted that keep out new competitors. This occurs most obviously when insiders ask that existing industry members be grandfathered so that licensing laws apply only to future entrants. If these new restrictions were truly needed to protect the public, they would apply to all workers, but the fact that some are grandfathered tells you in no uncertain terms that the goal here is protection from competition, not protection for consumers.”
“The state’s over-regulation of occupations hurts the most basic and dynamic area of our economy – workers and small businesses,” said Rep. Keith Downey, House author of the legislation. “Passing this Licensing Relief Act will let workers enter professions and allow entrepreneurs to serve their customers without unnecessary government barriers.”
One real-life example the legislators offered was Jim Dolphy, a former tree trimmer from Inver Grove Heights.
“For four years, I had met the needs of my customers in Minneapolis who wanted their trees trimmed. But now, I have been put out of business by the cities’ licensing regime that has nothing to do with health or safety but everything to do with big companies grabbing economic turf,” Dolphy said.
The bills have been introduced and will be heard in the Senate Commerce and Consumer Protection Committee on Wednesday.