WSJ Opinion: Detroit's Repressive Occupational Licensing Laws
Did any of you see this opinion piece from the August 26, 2016 Wall Street Journal? I'd be interested in hearing your comments about it.
I'm posting this here as a public service to my fellow Detroiters & ex-pats under the laws of Fair Use and not reproduced for profit. Blah blah blah blah. If Lowell says I can't do it, I'm sure he'll tell me.
How Detroit Can Liberate Its ‘Extreme Rebels’
Boost job growth in the Motor City by rolling back occupational licensing laws.
Jarrett Skorup and Jacob Weaver
Aug. 26, 2016 5:38 p.m. ET
Detroit’s motto is Speramus Meliora; Resurget Cineribus—We hope for better things; It will rise from the ashes.
This slogan now seems more appropriate than ever, as local leaders try to bring the economy back from the brink, three years after Detroit became the largest U.S. city ever to file for bankruptcy.
Mayor Mike Duggan, a Democrat, has signaled that he wants to encourage business and entrepreneurship. He says he is “betting big on small business,” while setting up job fairs and grants for small companies. Speaking to a group of young entrepreneurs in June, Mr. Duggan said that only “extreme rebels come to Detroit.” Departing from his city’s often hostile rhetoric toward business represents a positive change, but Detroit still has a long way to go.
An easy, no-cost way to boost job growth would be to roll back unfair and arbitrary occupational-licensing laws. Such rules mandate that potential workers and entrepreneurs undergo training, take classes and exams, and pay fees to hold a particular job or provide a service. Detroit currently requires licenses for at least 60 occupations. Since the state of Michigan already obligates workers to earn licenses for about half of these jobs, Motor City workers licensed by the state have to pay additional fees and meet another set of requirements to work.
Consider the contractor who installs and repairs elevators. Getting a state license to work in that field requires passing a state-imposed test and paying a $200 fee. Anyone who wants to practice that trade in Detroit must pay the city an extra $142 in fees and pass another oral and written test, which cost an additional $176. This means that it costs $318 more to be an elevator contractor in Detroit than anywhere else in Michigan. Plumbers, electricians, fire-alarm technicians, welders and other workers face even more obstacles to work in Detroit.
Worse than the financial burden is the extra time and energy needed to comply with the city requirements. Why would a contractor who could find a job elsewhere deal with the trouble of doing business in Detroit? And whom do these redundant requirements benefit? It’s not as if Motown residents are boasting to their friends that they have the safest elevators in Michigan.
Detroit also licenses many professions that the state and the rest of the municipalities in Michigan do not. Furniture movers and auctioneers all need licenses, as do batting-cage operators and even more obscure professions like animal-hide haulers. Is moving safer and more pleasant in the city? Are auction attendees there more satisfied? Do animal hides get transported in a more efficient way? Does it even matter?
Research shows that these barriers restrict job growth and provide no measurable health or safety benefits to the public. Morris Kleiner of the University of Minnesota concludes in a 2015 Brookings Institution paper that licensing requirements cost consumers more than $200 billion and result in up to 2.85 million fewer jobs. As the economic damage becomes more clear, Mr. Kleiner has found allies in groups as ideologically distinct as the Cato Institute and President Obama’s Council of Economic Advisers.
Worse, occupational-licensure regimes disproportionately harm people with low incomes. A study this year from the Mercatus Center shows that entry-level regulations, especially occupational-licensing requirements, contribute to income inequality. That’s because occupational licensing raises the costs of goods and makes it harder for less well-off Americans to find and maintain steady employment. State and federal work rules already contribute to this phenomenon, and Detroit makes it harder still. If the city wants to revitalize its economy, it should cut back most of its occupational-licensure requirements.
In the past few years, a bipartisan group of Michigan state legislators has passed laws to remove licensing requirements for seven professions. With the support of Gov. Rick Snyder, these advances surpass the reforms in every other state combined. Detroit, at the very least, should lower its licensing burden to be equal to state laws. These simple changes would help the city continue to rise from the ashes.
Mr. Skorup is a policy analyst at the Mackinac Center for Public Policy in Midland, Mich., where Mr. Weaver is a research intern.
