The Missouri General Assembly is contemplating erecting new "No Working by Order of the Licensing Board" signs throughout the state. This work stoppage action, if accomplished, will add to the already swollen unemployed rolls in Missouri.
The "No Working" signs will be erected by a newly created board for occupational licensing of home inspectors, if pending House Bill 1291 is adopted. No, signposts won't likely be placed in front of businesses or other places of work nor along roads or highways — they will be signs of a different sort.
The "No Working" signs will be constructed mostly of twenty pound bond paper and published in Missouri statutes, making it unlawful to pursue the work of home inspection without first complying with the whims of a state licensing board. Said another way, the new law will require all new home inspectors who work in Missouri to seek the government's permission to pursue their occupations.
The state, under the provisions of the bill, will delegate this duty to a board comprised of selected citizens, most of whom will be existing home inspectors. This new government board will determine the amount of education, skill and experience that, in their potentially biased and self-interested opinion, must be demonstrated by future applicants before they can perform the described work for pay.
Of course, the legislation will assume that all current workers have achieved such training and skill via the "grandfather" clause, keeping the current home inspectors from jumping through the new licensure hoops. A little trick employed by occupational groups that seek government protection of their market turf, to purposely avoid the great inconvenience and hardship of the law that they help create.
Rarely do citizens or citizen advocacy groups demand licensing of occupations for consumer protection. It is usually at the behest of guild-like associations who advance these occupational licensing laws. In a 2011 dissenting opinion in the case of Kansas City Premier Apartments Inc. v. Missouri Real Estate Commission, Missouri Supreme Court Judge Michael A. Wolff said, "the scores of regulatory statutes ... have ... a direct relation to protection of the economic interests of members of the occupation group."
Barely noticed by the public will be the fact that these new boards will increase the size and cost of state government. This increased cost, of an undetermined amount, will be borne by its citizens. New regulations by these licensing boards will reduce economic freedom which will result in reduced prosperity for all.
The noticeable effect of "No Working" signs of this sort will be to require all who receive pay for such work in the future to cease and desist, under the threat and force of law, until licensed by the respective boards.
Other effects of the requirement for licensure will be the restriction of competition from those that wish to enter the trade or profession, allowing a reduced quantity of practitioners to increase the price of the product or service provided by the licensed occupation group. The restriction of supply of workers in the occupation group will also result in the reduction of choices for the consumers who hire such workers.
In the 1950s, approximately 4 percent of the workforce was licensed as compared to nearly 30 percent today. Some estimates indicate that occupational licensing increases the cost by as much as fifteen percent above what it would otherwise be. Compare that cost to the unemployment rate and you can see that a substantial portion of unemployed workers could be absorbed into the work force, without a reduction in the standard of living, provided the cost impact of occupational licensing were eliminated.
Is there an alternative to this burdensome and restrictive process of board-managed occupational licensing while still providing consumer access to knowledgeable and experienced workers within occupation groups? Yes, it's certification vs. licensure.
Certification is a voluntary program for which the legislature establishes the criteria to grant recognition to a person who has met certain predetermined qualifications and may use “certified” as a designated title. Non-certified persons may also perform the occupation for compensation, but the use of the title “certified” by a non-certified person is illegal. Does it work? Think accountants and bookkeepers — now imagine how many would be added to the unemployment rolls if the law were changed that all accountants and bookkeepers must meet the "Certified Public Accountant" education and examination requirements.
Chip Mellor and Dick Carpenter of the Institute for Justice, which has crafted model legislation for certification vs. licensure, wrote in an opinion piece entitled "Want Jobs? Cut Local Regulations," published in the Wall Street Journal last July, "State legislators largely seem oblivious to the counterproductive effects of the licensure schemes they create." University of Minnesota professor Morris Kleiner estimates that replacing licensing with certification programs would create approximately 15,000 more jobs in Minnesota.
Take note Missouri.
Bruce Hillis is a retired businessman and advocates for free markets and constitutional governance. He currently lives in Mexico, Mo. This commentary was reprinted with permission from The Missouri Record.