Government Regulation

The report, “License to Work”, published by the Institute for Justice (IJ) on May 8, 2012, documents the expansion of many ludicrous licensing laws.  These regulations, most of which were implemented at the state level in the name of protecting consumers, often amount to incumbent businesses raising barriers to entry.  For example, it is easier to make money as an electrician when potential competitors face higher hurdles to doing business in a particular area.

IJ studied 102 occupational licenses and found that they require, on average, “$209 in fees, one exam, and about nine months of education and training.”  Those amounts might not sound like much, especially in lucrative professions like engineering or law, but the IJ study reveals that licensing requirements rarely correspond with the apparent danger or required skill of an occupation.  Often, low-income occupations that might ordinarily represent a path out of poverty for workers with limited skills are among the most onerously regulated occupations.  For example, an average cosmetologist spends 372 days in training, while the average Emergency Medical Technician can become licensed in just 33 days.  For preschool teachers, all but five states require at least five years of education and training, and 31 states require at least two exams.

The second report, authored by the staff of House Committee on Oversight and Government Reform Chairman Darrell Issa (R-Calif.), “Job Creators Still Buried by Red Tape,” reveals a mountain of paperwork at the federal level that is expanding at an accelerating rate.  Published on July 19, 2012, the Issa report pointed out that the number of final rules issued by federal agencies climbed by 6.5 percent from 2010 to 2011 alone, exactly as the economy was struggling to recover from a brutal 2009.

The Issa report also noted that the “published regulatory burden,” as measured by the American Action Forum (AAF), may top $105 billion in 2012 alone, and the amount of time spent on paperwork as a result of those regulations has already risen by 114 million hours.  There were 123.6 million paperwork hours added by federal regulations in all of 2011.  For context, the Burj Khalifa, the tallest manmade structure in the world, took 22 million hours to build.  To make matters worse, employers are still waiting to absorb the full impact of the Dodd-Frank Act, for which “only about 36 percent of the roughly 400 rulemakings [it] requires have been implemented,” and Obamacare, which does not take full effect until 2014.  

In short, the regulatory burden faced by businesses and workers is bizarre, heavy, and mounting.  Reform should be at the forefront of any congressional jobs agenda, for although regulation and licensing may not be what caused the 2009 recession, they are unquestionably dragging down the recovery.  Further, as the examples above make clear, regulatory reform, rather than being “a transfer of power from the trodden to the treading,” as The Guardian’s George Monbiot called it in 2010, is essential to a just and equitable economy.  For those in favor of increased regulation are often not the trodden, but the treading themselves.