Iowa is desperate to attract workers to fill open positions and populate our stagnating communities. However, a complex web of state laws regulating work might be turning thousands of would-be Iowans away to seek work in states with more freedom.
In her Condition of the State address last week, Gov. Kim Reynolds identified a major barrier to employment, and charted a clear path to meaningful reform.
Iowa, as Reynolds noted, is one of the most heavily regulated states in the country when it comes to professional licensing. According to a 2018 report by the Institute for Justice, about 25 percent of Iowa workers hold licenses to do their jobs, which is the second-highest rate in the nation.
Those overbearing restrictions impose real costs on the workers who are subject to them, and also on consumers and taxpayers who aren’t required to hold licenses.
The Institute for Justice estimates Iowa’s licensing system costs the state almost 50,000 jobs. The negative economic impact conservatively is estimated at $297 million, but could be as high as $4.6 billion by other measures.
Iowa Workforce Development lists more than 100 licensed occupations on its website. That’s a staggering figure, but dig down and the details become even more troublesome — many jobs require dozens or hundreds of hours of training, plus hundreds of dollars in fees to the state, which some of our neighboring states do not require.
Dental assistants, as one example, are required to undergo six months of training in Iowa. Only eight states in the nation — including Iowa and only one of its neighbors — require dental assistants to be licensed. Why would an aspiring dental assistant settle here, instead of Illinois, Missouri or Wisconsin?
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The burdens fall heaviest on poor people — they’re less likely to be able to afford licensing fees or to take time off work to seek training. Tragically, they also are least able to relocate to another state with more sensible laws.
Some level of professional licensing may be necessary to promote public safety, but there’s no reason Iowa needs to restrict more jobs than almost every other state in the nation.
To correct this ugly situation, Reynolds has a four-part plan to reduce barriers to employment — universal licensing recognition, fee waivers for low-income Iowans, allowing more people with criminal convictions to be licensed and a new commission to periodically review licensing requirements.
This is one of those issues where the status quo has so many glaring problems and the benefits of reform are so great that inaction seems impossible.
Bold licensing reform ought to have overwhelming bipartisan support, but I suspect it will encounter resistance nonetheless. There are four likely suspects to hold up licensing reform:
First, the nanny statists, who believe almost every human behavior necessitates health and safety regulations, no matter how burdensome and ineffective they may be.
Then the protectionists, erecting barriers meant to enrich their friends and donors in select industries by keeping potential competitors out of the market or out of the state.
And plain old leftists, instinctively against any economic activity that does not involve the government.
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Finally, the rabid partisans, who will be reluctant to entertain a good idea because it’s supported by a Republican governor and their personal bogeyman, Americans for Prosperity (never mind that liberal groups and Democratic politicians have called for similar reforms in recent years).
Reynolds’ plan is thoughtful and measured. It would not dismantle the licensing system or give unchecked power to amateur surgeons, a common and absurd straw man that critics throw out.
Exchanging labor for compensation among consenting adults is a fundamental human right. Fortunately, reducing barriers to employment also is the pragmatic thing to do to boost our state’s economy.
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