WSJ Opinion: Detroit's Repressive Occupational Licensing Laws

[kathy2trips]

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.

[DetroiterOnTheWestCoast]

His position might have been more effective if he could point to better examples of how licensing might inhibit growth. I doubt unfettering hide haulers and batting cage operators is the key to Detroit's rebirth.

[Richard]

This has be to one of the most insane things I have ever read in my life.

There is nothing in there that is not a common practice in any other city in this country and some are more strict.

Mr. Weaver,you are listed as a research intern,how about doing some research before you attach your name to something that will follow you throughout the rest of your career.

Mr. Skorup,this is why this country is screwed up,because of all the propaganda and the use of the media to spread it.

Just for a start,list one city in this country that does not highly regulate elevator service and repair and does not hold those repair personal to the highest standard.

Then maybe do a little research on the cities responsibility towards the residents when it comes to the service industry and the many ways the city generates revenue to provide services to those residents,such as it is.

Comparative analysis would have been a bit more productive.

[ABetterDetroit]

I kinda like getting on a elevator with good confidence that I will get off alive.

Some of this crap sounds like the same idiots who thought taking Flint off of high quality water and putting putrid untreated water into people's houses would save a few bucks when in reality that stupid idea will now cost us hundreds of millions or probably billions of tax payer money besides the high risk to human life.

No thank you, I would like to stick with a little common sence instead of some rhetoric.

[Jimaz]

... Some of this crap sounds like the same idiots who thought taking Flint off of high quality water and putting putrid untreated water into people's houses would save a few bucks when in reality that stupid idea will now cost us hundreds of millions or probably billions of tax payer money besides the high risk to human life....

Exactly.

At first I thought this WSJ article was satire but instead it appears to be the last throes of anarchistic libertarianism's death spiral.

Their deregulation of everything more important has produced disastrous results [[Global Financial Meltdown anyone?) so now they're focusing on this petty shit.

There are a lot of ideas that could help Detroit but I suspect this one is intended to do harm with a smiley face attached.

[Wesley Mouch]

I kinda like getting on a elevator with good confidence that I will get off alive.

Some of this crap sounds like the same idiots who thought taking Flint off of high quality water and putting putrid untreated water into people's houses would save a few bucks when in reality that stupid idea will now cost us hundreds of millions or probably billions of tax payer money besides the high risk to human life.

No thank you, I would like to stick with a little common sence instead of some rhetoric.

Common sense tells me that the State of Michigan Elevator licensing is protecting your life just fine -- and that Detroit's extra licensing steps are not protecting you at all, but just making it harder for some good firms to work in Detroit and keep the prices down. But hey, if you prefer a protected market where friends and family get the work, go ahead.

[JBMcB]

This has be to one of the most insane things I have ever read in my life.

There is nothing in there that is not a common practice in any other city in this country and some are more strict.

Why? There are already state-wide regulations, why does each city need it's own?

Mr. Weaver,you are listed as a research intern,how about doing some research before you attach your name to something that will follow you throughout the rest of your career.

Did you read the article?

https://www.mercatus.org/expert_comm...onal-licensing

[Hermod]

Where a city license duplicates a state license and doesn't add appreciably to the public protection over the state procedures, it would be a good candidate for elimination. The problem is the friends and family who man the licensing bureaucracy and don't want their city jobs to go away.

Funny how everybody who is in support of testing for licenses are the same people who lobbied for the elimination of testing for civil servants [[to the detriment of the public who have to deal with the untested civil servants).

[Honky Tonk]

I kinda like getting on a elevator with good confidence that I will get off alive.

Some of this crap sounds like the same idiots who thought taking Flint off of high quality water and putting putrid untreated water into people's houses would save a few bucks when in reality that stupid idea will now cost us hundreds of millions or probably billions of tax payer money besides the high risk to human life.

No thank you, I would like to stick with a little common sence instead of some rhetoric.

I agree, I'be had my share of dealing with incompetent contractors. The thought of deregulating them more makes me uneasy.

[Richard]

Why? There are already state-wide regulations, why does each city need it's own?



Did you read the article?

https://www.mercatus.org/expert_comm...onal-licensing

State sets guidelines,every city is different so every city has a different set of rules.

State says 5 years expirence,city of Detroit says 3 years expirence required,seems like that actually makes it easier or less restrictive to do business in the city when it comes to elevators,it took me 10 seconds of research to find that one out.

The city pays its bills and collecting revenue from license fees are part of the process.

License requirements are there to protect the consumer and provide a level of accountability when something goes wrong.

I am and always have been small business owner and the fees associated with doing business in a particular city is the least of initial investment problems,it is the red tape aspect that needs streamlining.

If my decision on opening a business in a particular city is solely based on the fees required to open that business,then I need to go back home and rethink.

California has the most restrictive rules and fees in the entire country but yet they seem to have business's.

I read what was posted and that was enough to get the jist of where it was going.

[Wesley Mouch]

I agree, I'be had my share of dealing with incompetent contractors. The thought of deregulating them more makes me uneasy.

Snychronizing City and State elevator rules is NOT deregulation. It would be done to achieve an increase in safety, and a decrease in cost to the taxpayers.

Let's say there are new safety recommendations coming out for escalators. There could be one meeting held to train all inspectors in Metro Detroit. Right now, there would have to be two meetings. This adds NO value. Adds no safety. In fact, balkanization of inspection probably decreases value and safety.

Separate elevator departments is probably a historical anachronism. At some point, there probably were NO elevators outside the city limits. I would guess that Detroit had 50 elevators before the first one was installed in Royal Oak. Just a guess. Once elevators started sprouting in the 'burbs, somebody had to inspect them. And elevator inspection is not a trivial skill. And its dangerous. Once a couple elevators were installed in Pontiac, Flint, and Ann Arbor, the need for state-wide inspection probably became evident.

We may be drilling to deep into elevators here. And its pretty obvious that elevator installers and inspectors should be licensed. But less clear that we should care about hair braiders, for example.

[mwilbert]

I am always suspicious of anything from the Mackinac Center [[or the WSJ opinion pages, for that matter), and frankly the specific examples they listed didn't seem unreasonable candidates for licensing. But I am also suspicious of occupational licensing. In some cases, licensing seems like a reasonable way to maintain standards and public safety, as in the much-discussed case of elevator operators, although I would like to understand why it serves the public interest to have separate city and state licensing. But frequently they are simply a way to restrict entry to various professions.

For example, at the moment it appears that interior decorators are trying to get Michigan to require their profession to be licensed, as they already are required to be in about half of the states in the US. I have not seen a good justification for this, and I doubt that there is one other than that interior decorators would like to restrict competition. But while I'd be happy to see the city review all of its regulations, including occupational licensing, it is hard to believe that you could remove enough occupational licensing requirements to make a noticeable difference in the city job market.

[Wesley Mouch]

I am always suspicious of anything from the Mackinac Center [[or the WSJ opinion pages, for that matter), and frankly the specific examples they listed didn't seem unreasonable candidates for licensing. But I am also suspicious of occupational licensing. In some cases, licensing seems like a reasonable way to maintain standards and public safety, as in the much-discussed case of elevator operators, although I would like to understand why it serves the public interest to have separate city and state licensing. But frequently they are simply a way to restrict entry to various professions.

For example, at the moment it appears that interior decorators are trying to get Michigan to require their profession to be licensed, as they already are required to be in about half of the states in the US. I have not seen a good justification for this, and I doubt that there is one other than that interior decorators would like to restrict competition. But while I'd be happy to see the city review all of its regulations, including occupational licensing, it is hard to believe that you could remove enough occupational licensing requirements to make a noticeable difference in the city job market.

I think you underestimate the desire of occupations erect 'barriers to entry' for potential competitors.

Today, you only need to look as far as AirBNB or Uber. Interior decorators will command a higher price if you must kiss the ring of their trade association to practice. Doctors vs. Midwives, Metro Cars vs. airport busses, Union Labor vs. low-wager workers [[minimum wage rules), Homeowners vs. Renters [[zoning restrictions)... what they all have in common is a desire to protect their market and maintain pricing power.

Of course in almost all cases, there are justifications. Uber is bad because their driver's don't undergo exactly the same background checks are taxi drivers. Valid question... but local licensing isn't the only answer.

In the end, the overall public good should be the goal. Uber is proving to help the underserved working poor get around. Is this not also a worthy goal? Uber has increased the total market for transportation, and increased overall employment. The new drivers are often those who need jobs. You really think the Taxi industry is that concerned about background checks? No -- its a straw man.

Back to your point.... yes.... removing occupational licensing can make a noticeable difference in the city and its job market.