Occupational Licensing

An Omaha Woman Took Her Business to Iowa Because of Nebraska's Licensing Laws

Unwilling to spend the money for a massage therapist license in Nebraska, Ilona Holland took her business across the bridge to Iowa.


Knut Schulz/Westend61 GmbH/Newscom

Nebraska's licensing rules literally are driving businesses out of the state.

Take the example of Ilona Holland. She and her husband, Eric, moved to Omaha in 2013. Holland had been a licensed message therapist in Maryland before the move, and after getting settled in Nebraska, she was eager to get back to work, only to discover that she would need an additional 400 hours of classes before she could qualify for a massage therapist license (after taking 600 hours of them to get her Maryland license years earlier).

With a child on the way, Holland knew she couldn't afford to spend thousands of dollars on the additional schooling. Instead, she decided to use her knowledge of Reiki, a traditional Japanese physiotherapy involving the transfer of energy from one part of the body to another, to start a business. Though Reiki requires touching, it doesn't resemble massage therapy in any other way—customers remain fully clothed throughout the treatment and there's no intense rubbing or pressure applied.

Just months after opening her small business, Holland got a visit from the government. Without a massage therapy license, she was told, she would have to shut her doors.

She did. Then she reopened them, on the opposite bank of the Missouri River.

Today, Holland still lives in Omaha, but she runs her business in Council Bluffs, Iowa, where the licensing requirement were less strict. Still, she worries about what could happen if her husband has to relocate for another job.

"If my husband got another job somewhere else, I would have to check and see whether I'd have to go back to school again. I can't do that, now that I have a second child on the way," Holland told Reason in a phone interview this week.

Holland and other Nebraska-based entrepreneurs made the case for licensing reform on Tuesday at the state capitol. An effort backed by the Platte Institute, a free market think tank, is encouraging state lawmakers to cut red tape and ease occupational licensing laws, like the one that caused Holland to move her business out-of-state. The group says that one in four workers in Nebraska are subject to mandatory government permission slips.

Licensing is supposed to protect the public's health and safety, but lawmakers should ask themselves why Holland's business is apparently not a threat to those things in Iowa–or, before that, in Maryland–but apparently is a danger to Nebraskans.

Unlike some critics of licensing, Holland says she believes the government should be involved in setting minimum requirements for people working in her field, but she thinks states could do more to respect and honor licenses issued elsewhere.

"I just find that its too excessive if we want to aim for consumer protection," she said. "I think that we should move forward and Nebraska should start making the change to open the borders to other states. Let's open it up."

Indeed, licensing laws can prevent workers from being able to move from place to place in search of better opportunities. A Brookings Institution study released earlier this year found that states with high occupational licensing burdens see fewer workers moving out-of-state when compared to states with lighter licensing requirements. That's not necessarily because people are happy in those places. Instead, researchers say workers feel locked in place because most state-issued professional licenses are not transferable, so moving out-of-state means you'd be out of business unless you can obtain a new license in your new state.

"There is a widespread belief that Americans' economic mobility has declined and that Americans are also less likely to 'move to opportunity' than in the past," wrote Scott Winship, a senior fellow with the Manhattan Institute, in a paper released in September that found a similar pattern. "These two assertions have been linked to argue that falling residential mobility is an important factor behind diminished economic opportunity in America."

More than one-third of all jobs in the United States are now subject to some form of licensing (up from just one in 10 jobs in 1970, according to research by Morris Kleiner at the University of Minnesota), so more workers than ever before are forced to take their licenses into consideration when thinking about a move. Reforming licensing laws in Nebraska would be good for workers, but it would probably be good for consumers too. According to the Heritage Foundation, licensing laws in the Cornhusker State cost families an average of $900 in inflated prices for goods and services last year.

Nebraska has already shown a willingness to act. Last year, the state legislature rewrote licensing rules for hairbraiders to remove a nonsensical requirement that hairbraiders spend 400 days in school to obtain a cosmetology license. The bill to exempt hairbraiders from the cosmetology licensing scheme passed the state's unicameral legislature without a single opposition vote.

Holland says she knows people working as servers and in retail because they are unable to spend the time and money it takes to get a massage therapy license in Nebraska. Loosening the rules would make it easier for people to find a job they enjoy, she said.

"Things change, we have to evolve," she said. "Lift people up, let them answer their calling and find their passion."