According to a 2018 study by the Institute for Justice, around 22% of West Virginia workers have a license to work. A new paper by the Cardinal Institute for West Virginia Policy takes a look at reform that would affect those one in five West Virginians.
Occupational licensing is often used as a way of maintaining a minimum quality standard for jobs in healthcare or that provide a service, such as a hairstylist, according to the paper. Licensing is overseen by a board that is largely created by the government and consists of people who work within the industry in question. The paper shows concern that the boards in West Virginia have no independent oversight, citing a Supreme Court case in North Carolina in which the Board of Dental Examiners attempted to require a license for teeth whitening, which was deemed anti-competitive.
“Existing practitioners have their own interests in mind as well–not just the interests of the citizens of West Virginia,” the paper’s introduction states, “When licensing board members are involved in deciding how difficult it is for new practitioners to enter, existing practitioners have very clear economic incentives to prevent new competition.”
According to Ed Timmons, Director of the West Virginia University Knee Center for the Study of Occupational Regulation, the fraction of workers that require a license has significantly increased from five percent in 1950 to 22 percent, and studies show increased licensing requirements reduce employment. Timmons also explained that not only do licensing laws affect those practicing in an industry that requires a license, but they can impact the prices of those services as professionals spend more money to meet the licensing standards.
“I think it’s important to make clear that I’m not condoning — and I don’t think any voices that are suggesting that licensing is in need of reform — that we remove all regulations. That’s certainly not what I’m suggesting,” said Timmons, “It’s just that licensing is the strictest form. Licensing makes it a crime to cut somebody’s hair for pay or to give somebody a massage for pay. There are other types of regulation that can still make sure that consumers are receiving a high quality service but don’t have the same costs.”
The main reform suggestion is the creation of a licensing ombudsman — an independent supervisor with the goal of promoting competition in the state. The ombudsman would have the ability to veto or modify board decisions and conduct an annual review of existing occupational licensing laws. Timmons said this would be similar to what Mississippi has already done.
“So, West Virginia wouldn’t be unique. There’s another state that has enacted this type of reform, and so far there hasn’t been any reduction in consumer safety or anything like that,” Timmons explained, “Instead, I think it’s been helping the economy in Mississippi.”
Timmons said The Cardinal Institute anticipates adding a part two to this topic where they will take a closer look at some of the consequences of a lack of oversight.