Hoover Institution

Should We Really Need a License to Work in California?

April 25, 2018 By Kerry Jackson 1 Comment

Taking a job as a manicurist in California requires more than filling out an application and receiving an offer from an employer. Manicurists have to have at least 400 hours of training, which can cost thousands of dollars. They must also take a written and practical exam.

The government-created barrier to a career in hair care and makeup application is even higher. A cosmetologist needs 1,600 hours of state-approved training. A barber has to have 1,500 hours, according to the California Department of Consumer Affairs.

Meanwhile, a mortgage originator, who must already be a licensed broker, or salesperson, needs only 20 hours of pre-licensing education, an emergency medical technician requires 160 hours, and a crane operator doesn’t have to have any at all, according to the Hoover Institution’s David Crane. Even tree trimmers are compelled to put in more training hours than EMTs, says Dick Carpenter from the Institute of Justice.

Though occupational licenses are purported to be protections for consumers, Crane points out that “studies have consistently found that licensing laws produce no better or safer services for consumers than do less protectionist and less costly alternatives.”

Instead, an occupational license is, as the Institute for Justice has straightforwardly explained, simply “government permission to work in a particular field.” And that permission is harder to come by in California, where more than one in five workers needs a government-issued license to hold a job, than in any other state but one.

There more than 200 jobs, and maybe as many as 250, in California that require an occupational license. The National Conference of State Legislatures has said that “the tangle of laws has become so thick that a commission in California recently admitted that the state has no way of knowing how many occupations it licenses.” Whatever the number, the Goldwater Institute says it is the most of any state. Mississippi has the fewest licensed jobs, a mere 40.

Overall, California was next to last in the overall burden on the workforce by the Institute for Justice’s License to Work rankings. Those rankings considered the “number and burden of licensing requirements combined.” Only Arizona has a higher burden.

Occupational licensing has been called a “protection racket” for good reason. It shields established workers from competition from newcomers. Morris Kleiner, a University of Minnesota professor who has researched the economic consequences of occupational licensing, told the Goldwater Institute that barring competition through government licensing allows existing practitioners to charge about 15 percent more for their services.

Kleiner has also said that “the cost of licensing nationally in the form of lost jobs” is 0.5 percent to 1 percent. This would mean an additional 39,000 to 78,000 jobs in California if licensing were reduced “relative to certification or other less restrictive forms of regulation.”

An alternative to the current regime would be a policy of reciprocity. Rather than forcing workers moving in from other states to go through California’s stiff licensing requirements, the state would instead recognize those workers’ permits if California has recognized their previous state’s requirements as appropriate. Under this arrangement, “the suppliers of a licensed service can adjust to changes in demand more quickly, limiting any surges in pricing, or delays in service provision,” Pacific Research Institute fellow Wayne Winegarden wrote in “Breaking Down Barriers: How Occupational Licensing Reform Can Improve The Insurance Markets, Benefit Consumers, and Expand Job Opportunities.”

Reciprocity would also encourage, Winegarden adds, “more competitors to enter the state” which “would also benefit consumers through lower prices and higher quality.”

“In the longer-term, reciprocity and/or recognition of other states’ licenses enables states to learn from one another,” says Winegarden. “Specifically, the competitive process of suppliers from different states competing with one another will enable states to discover how to better implement the desired licensing regulations.”

This should result in lighter restrictions all around.

Furthermore, says Winegarden, “reduced licensing regulations can also remove barriers to innovation,” a benefit that would be particularly useful in California, where much of the economy depends on innovation.

There are a couple bills in the current legislative session that were written to lower the job hurdles created by occupational licensing: Assembly Bill 2483, introduced by Assemblyman Randy Voepel, and Assembly Bill 2409, introduced by Assemblyman Kevin Kiley. These should be of particular interest to those who are having a hard time making a living because they’ve been shut out by California’s existing system and want no more than to complete on a level playing field.

Kerry Jackson is a Fellow at the California Center for Reform at the Pacific Research Institute.

This article was originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Hoover Institution, jobs, Kerry Jackson

Prop. 13 Revolution — A Far Cry From Reality

May 29, 2017 By Joel Fox 6 Comments

“Voters May Reconsider Prop 13,” reads part of the headline on the press release about the new Hoover Institution Golden State Poll. However, read the poll and you’ll see we are nowhere near a Proposition 13 revolution.

The headline is based on a test of the “split roll” approach to property taxes in which commercial property would be assessed more frequently than residential property. When 1700 California adults were asked if they supported the split roll, 39% strongly or somewhat supported the concept, 33% strongly or somewhat opposed the idea.

Most political observers will tell you if an issue doesn’t garner around 60% in early polling it has little chance of passing especially when facing the gauntlet of a political campaign. The Hoover Institution’s finding of 39% means proponents of a split roll campaign have a huge mountain to climb — and they would be climbing it with opposition boulders rolling down the mountain at them.

A multi-million dollar opposition campaign would raise arguments those who responded to the poll were not advised of before replying to the poll question.

The idea that taxes levied on business would not somehow be passed on to consumers or would reduce jobs and effect the economy was not stated.

The information supplied to respondents argued that passing a split roll would lessen the need for more taxes on individuals, hardly a convincing argument when tax hungry lawmakers have their hands out on both the state and local levels.

Stating that business would pay more taxes and individuals would not — in other words, voters were asked if they were willing to raise taxes on someone else– is an argument that has proved effective in recent state tax increase campaigns. Yet, the split roll question still got only 39% support in the poll.

Looking closer at the results, those strongly supporting the split roll concept stood at 13%, strongly opposed was a larger 20%. There is room to move voters who were unsure or did not have strong convictions on the issue.

In an article in Hoover’s Eureka publication that accompanied the poll, it was argued that a key to reformers winning the day is to convince renters to support the split roll and vote. But a lot of that strategy would depend on how apartments are treated under a split roll tax. Are they residential property that will continue under Prop 13 protections or are they commercial property, which under a split roll would be reassessed every year with the tax increase passed on to tenants?

I suppose if you raise most issues you would find about a third of the voters willing to consider change. In fact, a Reuters/Ipsos poll a few months ago found one out of three Californians supported the Golden State seceding from the Union.

Neither a Calexit nor a Prop 13 revolution is close to reality.

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee

This piece was originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Hoover Institution, Housing, Prop 13, Split Roll

Will Taxpayers Come to the Aid of Sanctuary Cities?

January 28, 2017 By Joel Fox 23 Comments

President Donald Trump started the process of denying federal grants to cities that don’t cooperate with federal immigration laws. Mayors of many large California cities, but not all, have declared they will resist the order and keep sanctuary status for undocumented immigrants. If the president is eventually successful in denying funds to sanctuary cities will local taxpayers bail out cities with additional tax revenue? That would be the ultimate test of voters’ support or rejection of sanctuary city policy.

We are a long way from that point but it is worth considering. Congress has to approve the reduced revenue to sanctuary cities. Lawsuits will be adjudicated since challenges are bound to be filed claiming the federal government cannot deny funds for local policies. Local government leaders in California also promise to establish funds for individuals to defend themselves against federal immigration deportation actions. These lawsuits and legal defense funds will add to taxpayer costs.

The debate over sanctuary for illegal immigrants is being fought on moral grounds. One side calls it a human rights issue. The other side asks how long civil society can function if people or institutions pick and choose the laws they will obey.

But support for and against the sanctuary policy may ultimately be measured in dollars and cents.

One indication of support or lack thereof for sanctuary policy is a poll conducted by UC Berkeley’s Institute of Government Studies. That poll showed 73 percent opposed the idea of sanctuary cities and that opposition was across the political spectrum. Yet, a more recent poll from the Hoover Institution had an even split on the question of sanctuary cities.

IGS director Jack Citrin points out that the poll results depend on how the question is asked. “In the IGS Survey which simply focused on cooperation with federal authorities in the case of someone arrested and detained, a large majority opposed non-cooperation, but this declined and became more polarized by party and ideology in the Hoover question which gave reasons for each position and noted that police chiefs felt this might deter cooperation in solving other crimes,” he said.

Citrin notes that Trump’s opposition to the policy tends to polarize the attitude of voters.

So will taxpayers be willing to support politicians defiance with their dollars, especially as some officials advocate for more taxes to increase traditional government services?

Citrin’s view: “This would be a good test of public opinion, particularly if the price was simply to hand over people charged or convicted as criminals. California has been willing to raise taxes recently, but mainly taxes on the rich. This kind of a tax might have a chance in highly liberal communities which now are exuding bravado and resistance but again depending on the framing and the size of the tax it wouldn’t be a slam dunk.”

This piece was originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Donald Trump, Hoover Institution, Sanctuary Cities