Mike Nichols testimony on professional licensure

On April 6, 2017, WPRI President Mike Nichols testfied in Madison before the Wisconsin Senate Committee on Public Benefits, Licensing & State-Federal Relations. Below is the transcript of his presentation.

Mr. Chairman, members of the committee, I’m Mike Nichols. I’m the president of the Wisconsin Policy Research Institute. I think most of you on the committee are familiar with WPRI. We are a nonprofit, nonpartisan 501(c)(3) guided by the belief that free markets, individual initiative, limited and efficient government and educational opportunity are keys to economic prosperity and human dignity.

We’ve been researching and writing about policy in Wisconsin for 30 years. Our funding comes from a wide variety of sources, including foundations such as the Bradley Foundation, Wisconsin businesses and individuals who share our concerns about and hopes for our state. Our goals are simple: At a time when too many people are not sharing in the economic gains of recent years, we want to make sure everyone has the opportunity to better themselves, contribute to their community and support their family.

That’s why I so appreciate the chance to provide you with some information on an issue of great interest to so many Wisconsinites: how to make sure everyone who wants to work or start or run a business can do so without undue government interference.  

Unfortunately, right now in this state, far too many Wisconsinites are unable to do that.  You can read about some of them in the publication we’re releasing today: “Government’s Love for Licensure.” In fact, you can quickly download an app to scan one of the QR codes in the report and watch videos of folks who aren’t asking for anything from the state government that you run — except for one thing: They just ask that the state please stop putting obstacles in their way.

You’ll find the story Cassie Mrotek, who spent $16,000 and a year of her life getting a certificate from a cosmetology school in Florida and put in 1,200 hours of training before moving back to Wisconsin — only to be told, in essence, she’s not good enough to cut hair in our state. Let’s set aside for a moment the unfairness of this situation for Cassie herself, who I think we can all agree is utterly qualified, and look at the absurdity of the bigger picture. We’re have a skills-drain and a brain-drain in key parts of this state. According to Brookings Institute statistics released just last week, net domestic out-migration from the metro Milwaukee area in 2015-’16 — that’s the number of people moving out of the area to someplace else in the United States in comparison to the number moving in from elsewhere in the United States — was  over 11,000 people. Eleven thousand more people moved out than moved in. By the way, you know where a lot of them go? They go from the Snow Belt, places like Milwaukee, to the Sun Belt, places like Florida. Like Cassie did.

So here we have just one person dying to come back and be productive and work, and we’re essentially saying, “Nah, you need to jump through some more hoops before we’ll let you be really productive. You’re not good enough.” We spend a lot of time in this state wondering how to create opportunity. How about just not destroying opportunity?

And what about Krissy Hudack? Krissy (pictured at left testifying with Mike Nichols), a resident of Iron River up north is profiled in our report as well.  She is exactly the sort of person we need in this state. Bought a small business in a small town where most folks don’t make a lot of money — a hair salon that is an integral part of that community. The only problem: The manager of her salon moved on not long after Krissy bought it — and the state then told her that in addition to her cosmetologist license, she has to put in 2,000 hours of practical training at another salon in Ashland and take 150 hours of coursework plus pass a manager’s exam in Eau Claire. She calls it “robbery.” She’s been working for two years without a paycheck and, on top of that, feels that she is getting “nickeled and dimed” by the State of Wisconsin.

And why?

We asked Capital Policy Analytics to help shed some light on that question. Please read their report. In a paper called “­Occupational licensing in Wisconsin: Who are we really protecting?” Ike Brannon and Logan Albright point out that licensure ostensibly exists for two reasons: to protect the public from health hazards or scams. This is entirely appropriate in some instances. One hundred years ago, there were only 14 professions that required licenses, and they were mostly medical-related. That seems appropriate. But they point out that the state of Wisconsin has had an enormous growth in licensed jobs and professions, especially in the last couple decades. From 1996 to 2016, the number of licensed professions increased by 84 percent.  Total population grew at only 10 percent during this 20-year period.

Today, a thorough reading of the Department of Safety and Professional Services’ database yields 207 different licensed occupations, divided up into the categories of Business Professions, Health Professions and Trades Professions. In addition, the Wisconsin Department of Agriculture, Trade and Consumer Protection lists an additional 140 categories for licensed professional activities.

An exhaustive look at every licensed profession is not possible here, but some examples that stand out include auctioneers, landscape architects, interior designers, geologists, manicurists, juvenile martial arts instructors, Christmas tree growers, firewood sellers and the particularly bizarre peddler’s license. For nearly all licenses, the Department of Safety and Professional Services requires hundreds — sometimes thousands — of hours of training, hundreds of dollars in application fees, at least one exam and a waiting period that could range anywhere from several days to many months before a license is issued.

Are all these folks really a threat to our health? Do they really need to go to such elaborate lengths to prove they aren’t going to somehow harm the rest of us? And if someone somewhere gives somebody a bad manicure or a lousy haircut nowadays, isn’t Facebook or Yelp going to hold that business accountable more effectively and long before the government of the state of Wisconsin does? A simple Internet search of a company often will provide more relevant information than anything provided by the state. Illegal or unethical activity is only a social media post or smartphone photo or video away from 10,000 views and a windfall of poor publicity, negative public feedback and a probable loss of business. The market will invariably react more quickly than a government agency.

If a bad haircut were a danger to a person’s health, my dad would have been locked up forty-five years ago for the lousy crewcuts he gave me. Lucky for him, he’s still alive and not living in the state of Wisconsin.

There’s no absolutism here. Yes, sometimes the government is needed to safeguard the citizens to whom it belongs. But far too often, according to our authors, there appears to be another motive. Simply put, the authors believe that the steady increase in professional licensing is being driven by both the well-intended but excessive growth of government and a desire to protect incumbents from competition.  Please read our report. We went through a bunch of complaints to the Wisconsin Department of Safety and Professional Services and — guess what — a lot of them have nothing to do with concerns about unsafe practices. They come from people who already have a license, who were forced to jump through the state’s hoops and want to make sure other people have to do the same thing. They’re explicit about it:

·       ►You’ll find the story of an auctioneer who complained that somebody he said was not licensed was undermining “the properly licensed auctioneers of this region and impact(ing) our ability to compete and earn a living.” The complainant wrote that he was seeking action “from the state to protect our investment in business and our profession.”

·      ► You find an example of a barber in Green Bay lodging a complaint against a potential competitor who apparently did not have the right license. “I feel that everyone should have to go to school like all other professionals as myself and others (have),” the complainant wrote.

·       ►You’ll find a complaint lodged against a young mom in Cumberland, Wis., working out of her home doing nails, hoping to bring in a little extra cash. She’d posted her pitch, along with photos showing her work, on the Internet and was upfront about not being licensed. She described herself as “a stay-at-home mom looking for something to do and people to talk to.” I don’t know if she got any customers, but she did get a complaint filed against her with the Wisconsin Department of Safety and Professional Services.

The more license requirements, the fewer practitioners. This, we believe, translates into fewer jobs and higher prices — and, of course, more money for government through licensing costs.  

So consumers suffer. Folks trying to keep businesses running suffer. And people without jobs who are fenced out — often folks from lower-income communities without a lot of start-up cash or access to good schools — suffer as well.    

We support efforts in Madison to create an Occupational Licensing Review Council to examine which license and ongoing training requirements are necessary to protect Wisconsin’s citizens and which are damaging. You’ll find a rough framework for differentiating between the two in our report. But in the meantime, we ask that you please consider the impact of the rules and regulations on people like Cassie and Krissy and so many others.

Occupational licensing does sometimes provide benefits to society — peace of mind, a modicum of safety and an assurance of competence, for instance — but this comes at a cost. The urgent need for reform is clear. We believe it is time to ask whether licensing regimes are the most expedient way to assist consumers seeking the services of occupations where there is no valid threat to health and safety.

Thank you.   

(Photo by Allen Fredrickson)

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