Bipartisan Support for Occupational Licensing Reform

occupational-licensing-2SACRAMENTO – One of the rare issues where politicians on the left and right increasingly agree involves occupational-licensing requirements – the oftentimes cumbersome government-approval processes that many workers must go through to become certified to work legally in their profession. Both sides have come to recognize that excessive rules limit employment opportunities for the poor, quash economic development and force people into the underground economy.

Advocates for reform don’t argue against training and regulations per se, but they recognize that it’s unnecessary to, say, force African-style hair braiders to spend thousands of dollars and go through hundreds of hours of traditional barbershop training when the hair treatment they provide has nothing to do with the certification they receive. There’s broad understanding that people within existing professions often impose unnecessary barriers to entry as a way to reduce competition and artificially inflate wages. Defenders of the system say the rules are needed, however, to protect health and safety.

California’s independent state oversight agency, the Little Hoover Commission, this month released a report on licensing barriers that could serve as a blueprint for the state Legislature when it returns to session in January. In his letter to the governor and Legislature, the commission’s chairman, Pedro Nava, made it clear what licensing is all about:

One out of every five Californians must receive permission from the government to work. For millions of Californians, that means contending with the hurdles of becoming licensed. Sixty years ago the number needing licenses nationally was one in 20. … What was once a tool for consumer protection, particularly in the healing arts professions, is now a vehicle to promote a multitude of other goals.”

Some of those goals are reasonable and well-intentioned: professionalizing industries, guaranteeing a level of quality and so forth. But they also “have had a larger impact of preventing Californians from working, particularly harder-to-employ groups such as former offenders and those trained or educated outside of California, including veterans, military spouses and foreign-trained workers,” Nava explained. Furthermore, the standards are not always equal. He pointed to manicurists, who need 400 hours of education, whereas tattoo artists are required to register and conform to some minimal requirements, take a single class and pay $25.

According to the report, California actually has a lower percentage of licensed people than other states. That 20 percent figure places it in 30th place. One-third of Iowans have a license and nearly 31 percent of workers in Nevada have one, also. But California’s rules are more onerous than other states “in the amount of licensing it requires for occupations traditionally entered into by people of modest means,” according to the report. For these types of professions (pest control, manicurist, etc.), the required rate of licensure is a whopping 61 percent.

The commission held hearings this year to review the state’s occupational-licensing system. The commission found the licensing requirements to be “obvious to many” when it comes to health-care professions such as nursing. But it also heard testimony from those in “seemingly less-intuitive industries to speak about health and safety considerations.” It quoted a representative from the cosmetology industry, who defended the licensing requirements because “many of the procedures cosmetologists do can result in irreparable damage.” These include skin peels and the use of strong hair chemicals. But critics “say that there is a spectrum of activities to manage health and safety risks and that licensing should be considered the nuclear option.”

One alternative would be private certification. In those situations, a private authority (think of automotive mechanic organizations) sets standards. People are free to follow them or not – but being certified by that body confers a sense of legitimacy that consumers can consider when choosing to patronize a business. The commission quoted an attorney with the reform-oriented Institute for Justice, who noted: “Outside of driving, he said, eating out is one of the most harmful activities the average consumer will do on a regular basis. But the state doesn’t license food handlers.” That certainly puts the concept in perspective.

Critics argue that licensing unnecessarily raises prices. It also quashes innovation. The commission used the example of a barber who found a need for mobile barbershops, but state regulations only allow barbers to operate out of a permanent location. “Eventually he gave up on his idea even though he had data indicating demand for that service.” More is lost there than just a job. A person had to give up his entrepreneurial dream. Furthermore, the commission noted that excessive regulations inhibit mobility, given that a person trained in one state would have to go through enormous training again to operate in another state.

“Occupational licensing regulations are made in the name of protecting the public interest,” according to the commission. “The reality, witnesses told the commission, is that occupation regulation often amounts to rent-seeking. Briefly defined, rent-seeking is an attempt to influence the political, social or other environment to achieve an economic gain for oneself without contributing to productivity.”

That’s an economic way of saying that people who already work in an industry often band together and lobby to keep new competitors out of that industry. The commission refers to it as “gatekeeping.” And it’s really tough on poorer people trying to get their foot on the economic ladder.

The commission offered a variety of recommendations for the state government: collecting more demographic data on license applications; seeking federal grants to review the current licensing requirements; requiring reciprocity for license holders from other states; seeking sunset provisions on licensing regulations; creating a research institute to study new licensing laws; improving training for veterans; and creating apprenticeship rules that would allow people to work while they address their licensing requirements.

As mentioned above, the commission argues that the current situation poses particular burdens on former offenders, who “typically must demonstrate that their convictions were not substantially related to the duties of the occupation.” The commission pointed to those who reported “some arbitrariness in licensing authorities’ decisions.” Military spouses face problems as they follow their partners to other states, where their licenses don’t always transfer. Veterans and foreign-trained workers often have the requisite skills, but need to go through the entire licensing process anyway. The Legislature has in the past few years passed several bills designed to help veterans and military spouses, but the problem still exists for them, too.

Reformers call for wide-ranging changes. The last real attempt at this came in 2004, when then-Gov. Arnold Schwarzenegger introduced the California Performance Review. “Facing insurmountable hurdles, Governor Schwarzenegger withdrew the plan from consideration a month later,” according to Nava. But times are different now.

There’s rarely much bipartisanship in the state Legislature, but there are occasional promising signs. This year, legislators approved – and the governor signed into law – a measure that would reform the way police departments take private property without a conviction (asset forfeiture). Legislators from both parties saw that the burden fell heavily on poor Californians and that the process seemed to violate constitutional rights.

Likewise, liberals recognize that excessive licensing regulations harm opportunities for poor people and conservatives often see the rules as an affront to a market-based economy. The time may be ripe for reform and perhaps Little Hoover’s suggestions will lead the way.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

This piece was originally published by CalWatchdog.com

Government fails to earn respect of Californians

Nine out of 10 Californians believe state government wastes their tax dollars. Two-thirds believe state government is run for the benefit of a few special interests and state officials cannot be trusted to do the right thing.

Those results from a Public Policy Institute of California survey are similar to the dissatisfaction with and distrust of state government that Californians expressed 10 years ago. The reason for that disaffection and what should be done about it was the focus of the Jan. 22 meeting of the state watchdog agency the Little Hoover Commission.

The findings in the survey of 1,704 adults conducted from Nov. 10-17 (with a sampling error of 3.7 percent):

  • “Do you think the people in state government waste a lot of the money we pay in taxes, waste some of it, or don’t waste very much of it?” 54 percent – waste a lot, 35 percent – waste some of it, 8 percent – don’t waste very much of it. Seventy-eight percent of Republicans, 60 percent of independents and 46 percent of Democrats believe state government wastes a lot.
  • “Would you say the state government is pretty much run by a few big interests looking out for themselves, or that it is run for the benefit of all of the people?” 67 percent – run by a few big interests, 28 percent – run for the benefit of all of the people.
  • “How much of the time do you think you can trust the state government in Sacramento to do what is right?” 61 percent – only some of the time, 25 percent – most of the time, 7 percent – just about always, 5 percent – none of the time.

The results were similar for all three questions across regional and demographic groups and similar to a survey conducted a decade ago. But they are slightly better than an even worse skepticism of state government in an October 2010 survey.

Federal and state governments

State officials can take minor consolation that Californians are even more skeptical about the federal government. On the other hand, Californians are less distrustful of local government, particularly in the area of wasting tax dollars, according to a May 2011 PPIC survey.

“In summary, negative perceptions about the effectiveness, responsiveness and efficiency of state government are pretty consistent over time and widely held in the public today,” PPIC President/CEO Mark Baldassare told the commission. He listed four implications of the results:

  • “Californians will continue to value the citizens’ initiative process as they seek to have a say in the major decisions made by their state government.
  • “Many Californians will be skeptical about the need for higher taxes and more state revenues, given their feelings about waste.
  • “Proposals to move authority and control to the local level from the state level are the kinds of proposals that will resonate with Californians today.
  • “Last but not least, civic disengagement will continue to be a problem. The kind of civic disengagement that we saw in the record low turnout in last year’s election. And we may not have seen the lowest of low turnouts yet, given the disengagement Californians feel from state government today.”

Only 30.9 percent of California adults voted in the Nov. 2014 general election and just 18.4 percent in the June primary, according to Baldassare, who said in his blog: “Millions of Californians who could register to vote did not, and millions of Californians who could vote opted out. These numbers clearly point to a California public that is disconnected from their state government today.”

Hopeful

But Baldassare, perhaps anticipating the PPIC survey released this week showing increased optimism that the state is heading in the right direction, closed his remarks on a more hopeful note.

“In the wake of a growing improvement in our economy and fiscal situation, which has led to higher approval ratings of the governor and Legislature than we’ve seen for several years, and also at a time when we’ve just gone through a series of major legislative and fiscal reforms that the voters have approved in recent elections, the public is signaling their support for those reforms as well as efforts to move some activities from the state to the local level through both the local control of school funding and our corrections realignment,” he said.

Asked to explain the reasons for residents’ disconnection with government, Baldassare said part of it is a general skepticism of all institutions, particularly by independent voters. He added it’s also due to Californians’ unsatisfactory experiences dealing with state government. “They do have real experiences which confirm these broadly held beliefs,” he said. “That’s where you have control.”

The question of what the state can do to win the confidence of residents became the focus of the rest of the 2½-hour hearing.

“We should focus on the things which state government can directly affect,” said Commissioner David Beier. “To me that’s the building of trust through the delivery of governmental services. One of my business school colleagues said, ‘Building trust is a question of two things: intention and competence.’ I don’t think anybody has any question about the intention of state officials to deliver high quality services and positive outcomes.

“The question is one of competence. And it’s not a question of the qualification to deliver high quality goods and services. There are better, smarter ways to deliver service. And if we can identify the top agencies and the frequency of interaction with citizens, I think we can affect at least that component of government trust.”

DangerfieldNo respect

A big part of the problem is that the message Californians receive from state government, whether via the Internet or waiting in line at the DMV, is that state officials don’t respect them, according to Cyd Harrell, a user experience expert with Code for America, which specializes in government technology.

“Design sounds like icing on the cake or making things pretty,” she said. “But at the core, design is creating an effect on purpose. People compare the best the private sector has to offer in the same space, the five-inch screen, where it gets Facebook, Amazon or an online game. When the government experience doesn’t live up to the level of experience of the other institutions they interact with, there’s an assumption that the effect is being created on purpose.

“That’s part of where that distrust in government comes from. There’s an assumption that if I have difficulty reading it or difficulty filling out a form or it doesn’t speak in a language that I easily understand, then that’s an effect the government intends, or at least is comfortable creating as part of the design.

“In the private sector, we have companies competing to offer people the best experience for their money. Government is different, naturally. If I don’t like the experience of interacting with the government when registering my car or seeing if I’m eligible for benefits, I can’t exactly take my business elsewhere. So in some ways that can be seen as a free pass [for government officials]: ‘Don’t worry about it, where else can they go?’

“But I truly think there’s a moral imperative. Government needs to serve all of the people. It needs to offer them experiences that respect their time and dignity and their abilities, whatever those may be.”

Currently, few government agencies practice what Harrell calls human-centered design. But she said it’s not that expensive to implement. It just takes commitment from top government officials to want to do it. “So the critical thing, in my opinion, is a mind shift,” she said.

Worst enemy

Other experts at the meeting agreed that government is often its own worst enemy when it comes to working smarter and better. Bob Stone, a performance adviser for the city of Los Angeles, provided an example of the Los Angeles Fire Department’s procedure for providing two replacement pieces of uniform for each firefighter annually.

“If you were to be awarded two pieces of clothing, most people would go to the Internet, Amazon or Wal-Mart and they would buy it,” said Stone. “What the city does: the firefighter fills out a form, gets a supervisor to approve it, gets a station chief to endorse it. It’s sent to the battalion chief across town, he endorses it, sends it to the procurement office. They gather up all these things and put in an order with the supplier. A big box of supplies comes into the central yard. We pay somebody to unpack the boxes, and these go to Van Nuys and these to San Pedro, send these to West Los Angeles. That’s the way we do things.

“It’s crazy. It was a sensible way to do things in the 1950s. What they are doing, and they are going to start hopefully in the next month, they are going to give the supplier a list of fire department members who have this entitlement. And they are going to tell each of these people, ‘You’re entitled to two pieces of clothing that we’ll pay for. Go to the supplier’s website, they know who you are, identify yourself and order what you want. If you want more than two, you can buy whatever you want, you just have to pay for it. We’ll pay for the first two.’

“And this happened because we told the people that were working there, ‘Don’t do anything crazy on purpose. We do enough things crazy by accident. If you’re doing something dumb, stop it and do something smart.’ So they did this. And I’m hopeful that there are going to be thousands of examples like this.”

The Little Hoover Commission plans to submit its recommendations to the state in a report, probably later this year.

Originally published by CalWatchdog.com