Losing workers
Universal licensing can help state
Do we want to lose some of our talented football players to Oklahoma or Missouri? Of course not. So why do we encourage this to happen to our working people?
Some of our current or potential workers will find it easier to practice their profession in other states instead of Arkansas because we have not yet enacted universal licensing recognition. This reform would allow professionals who satisfied their occupational licensing requirements in other states to transfer their licenses to Arkansas.
Our legislators understand this licensing issue very well, as they already passed Act 135 in 2021, which made it easier for military personnel and their spouses to transfer their licenses they earned in other states.
The act stated: “Arkansas sets the bar as a national leader in addressing employment barriers faced by uniformed service members, uniformed service veterans, and their spouses in attaining occupational licensure.”
The bill passed the Arkansas Legislature without a single representative or senator voting against it. But we are now led to the obvious question: Why stop at military personnel and their spouses?
Why do we want to maintain extra employment barriers for any licensed professional residing in Arkansas? While Arkansas “sets the bar” regarding employment barriers faced by military families, we are not leading the way with other families.
According to the Institute for Justice, 18 other states have enacted universal recognition. Most of these states do not impose any residency requirement. For example, if you have held a license for one year, you can move to Missouri and work without any hassle. When Missouri passed its universal licensing recognition in 2020, Gov. Mike Parson said, “This will not only help fill critical jobs in our economy but also highlight Missouri as an ideal state to live and work.”
Will people reside in Missouri instead of Arkansas because of our lack of universal licensing recognition? The evidence is starting to come in.
According to published research by economists Darwyyn Deyo and Alicia Plemmons, counties at a state border experience more net migration when they are in a state that enacted universal licensing recognition. This evidence suggests that we may be losing some of our workers to other states because of our employment barriers.
This is not a good thing. Instead of losing working people to other states, Arkansas would be better off with more people in the labor force. According to the St. Louis Federal Reserve, only Mississippi, New Mexico, and West Virginia have a lower labor force participation rate than Arkansas.
Proponents of occupational licensing requirements may say that we need strict licensing to promote the health and safety of our residents. This argument has serious flaws.
First, many of Arkansas’ licensing laws go well beyond health and safety. For example, less than 10 percent of the required cosmetology training in Arkansas directly addresses health and safety. Most instruction is about effective techniques. The market can easily deal with effectiveness without government mandates. Do we check out online reviews of hair salons or the credentials of the hair stylists?
Second, strict regulations can backfire. Research by myself and others have shown a positive correlation between more licensing rules and more crime. If a state imposes high employment barriers, some people may be blocked from the labor force. With limited employment options, people are more likely to commit crime. According to the FBI, Arkansas has the fifth-highest crime rate in the country.
Third, Arkansas has plenty of room for reduction of occupational barriers. In terms of the number of occupations we license and the requirements we impose, Arkansas has the third-most burdensome regulations according to the Institute for Justice. If we reduce our occupational licensing regulations sensibly, the evidence suggests that we are likely to be safer, not less safe.
Our state has been looking for ways to reform occupational regulations. In 2019, Arkansas passed Act 600, which required legislative review of occupational entities. The act created the Occupational Licensing Review Subcommittee, which is still conducting meetings.
In Act 600, the Arkansas General Assembly said, “Arkansas is taking a leading role in the nationwide pursuit of reforms to the system of occupational licensing.” Since that statement, many states have enacted universal licensing recognition. Arkansas has not.
In our coming legislative session, we can get back to “leading” and learn from other states that have reformed. The alternative is losing some of our hardworking residents to states with more reasonable policies.