Hearing of the Contracting and the Workfroce Subcommittee of the House Small Business Committee - Occupational Licensing Laws

Hearing

Licensing is a process by which the state makes it illegal to do a certain job unless one completes a series of mandatory requirements. The requirements are usually set by a licensing board made up of members of the profession or by legislatures with significant input from current professionals. The origin of these limits had promising goals and was intended to protect the safety and well-being of residents.

But, since the 1950s, the number of licensed workers has jumped from just 5 percent of the workforce to nearly 30 percent today. In total, roughly 1,100 occupations now require some sort of license by at least one state. Much of the time these licenses require fees to be paid, training of some sort, and written examinations. While the requirements serve a functional purpose, they are also a barrier for entrepreneurs to enter an occupation.

Today's hearing will give us the opportunity to learn more about the genesis of professional licensing and its evolution. Though this issue is one for the states to take up, it is nevertheless important for us to bring it to the forefront. Licensing requirements have exploded to new fields, some that merit regulation and others that raise the question of whether there is too much licensing.

States have broad powers to regulate their workers and have a duty to protect their residents. Requiring certain professions to meet strict licensing rules only makes sense in that regard. However, we must look at the implications licensing has on entrepreneurs. They are the backbone of our economy and we rely on them for innovation and growth.

Requirements for training, fees, and examinations can keep qualified individuals from starting a business or entering a new profession. And a lack of uniformity among the states in their licensing rules impact many entrepreneurs attempting to move to another market where they see an opportunity for business growth. States should not be hindering growth in these viable markets for business expansion or creation -- they should be fostering these self-starters.

Encouraging competition for small firms is critical to job creation and economic growth. The Sherman Antitrust act was created to do just that -- protect consumers and business owners from anticompetitive behavior. We will hear from witnesses about how antitrust law applies to cases involving licensing boards and what approach is best for ensuring qualified individuals can enter an occupation without fear of excessive costs.

Despite the fact that this topic belongs on the state level, the well-being of American entrepreneurs is a concern to the nation as a whole. That's why I'm glad we are holding this hearing. It will give us a chance to hear some personal experiences of those who have successfully navigated state regulations and what insights they can provide to reform this system.

As more Americans begin to take risks and start their own businesses, it is vital to bring licensing requirements to their attention. Balancing the need for market competition with the need for consumer protections will give small firms the certainty they require.

We are here to today to learn more about licensing rules and how to address the possibility of over-licensing. In order to ensure the success of our self-employed, we must understand the challenges and benefits these laws hold for entrepreneurs. I thank all the witnesses for being here today and I look forward to your comments.

Thank you and I yield back.

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