Arizona's Governor to Licensing Boards: What Is It That You Do?
More than two dozen licensing boards have until June to give him an answer.
Doing his best impression of John McGinley's character in Office Space, Arizona Gov. Doug Ducey signed an executive order last week asking his state's assortment of licensing boards to explain "what would you say ya do here?"
More than two dozen licensing boards have until the end of June to make their case to the governor office, explaining how requiring a government permission slip before someone can cut hair, install an air conditioner, or work in a pharmacy protects innocent Arizonans from the scourge of unlicensed workers. In addition to a "critical and comprehensive review" of all licensing laws, the new executive order instructs boards to take action to reduce unwarranted regulatory burdens and administrative delays that slow the issuance of licenses.
"There is great value and purpose in work," Ducey said in a statement. "Government should never stand in the way of someone's efforts to start a new life or profession."
When it comes to erecting barriers to employment, though, Arizona is among the nation's leaders. The state requires licenses for 64 different professions, second only to Louisiana (which has 71 different state licenses), according to a 2012 report from the Institute for Justice, a national libertarian law firm, tracking state licensing requirements. According to IJ, Arizona also stands out for having some of the most onerous licensing laws. Though the requirements vary widely from license to license, Arizona requires an average of 599 days—more than a year and a half—of training before granting permission to work.
Ducey is right to investigate whether those requirements actually protect the public or if they exist solely to restrict employment and competition in certain professions.
For example, Arizona is one of only five states to require a license for contractors working on residential air conditioning and heating systems. Getting that license requires 1,460 days of training—despite the fact that 45 other states get by without such requirements.
"Regulatory boards serve one purpose and one purpose only," the executive order says, to protect the public from harm. "All other issues beyond that one purpose can, and should, be handled by the private market."
Too often, licensing boards exist to protect the interests of incumbent businesses. There's no shortage of examples, but maybe the best recent case came from right there in Arizona. In February, the Arizona State Board of Cosmetology launched an official investigation of Juan Carlos Montesdeoca, a cosmetology student, after Montesdeoca organized an event to provide free haircuts to the homeless.
Ducey found out about the investigation after it was reported in the media (including by Reason), and he was not very happy about it.
Licensing rules have been proliferating for years, with little skepticism from state officials. Finally, that's starting to change. Gov. Phil Bryant in Mississippi is expected later this month to sign a bill implementing a series of major reforms to his state's licensing rules, including a provision that gives executive branch officials greater oversight over rules passed by boards.
The Federal Trade Commission is launching a new economic liberty task force to help states fix problematic licensing laws—and potentially punish states that don't take steps to curb regulatory boards acting in blatantly anti-competitive ways.
Ducey's executive order is a good first step towards freeing Arizona from the grip of the nation's most onerous licensing regime, and the state legislature has been busy too.
This session, it passed a bill requiring that any occupational regulation—including occupational licensing laws but also regulations on people already in the business—must be proven by the state to be "necessary to specifically fulfill a public health, safety, or welfare concern." Another bill working its way through the legislature would change how courts handle challenges to licensing rules or other government regulations by ordering courts not to defer to administrative agency decisions. In other words, courts would no longer have to accept that a student broke the law by cutting hair without a license simply because the state board says he did.
"These three things together are a very strong step toward economic liberty in Arizona," said Tim Sandefur, vice president of the Arizona-based Goldwater Institute, a free market think tank that has pushed for the passage of those two bills, told Reason via email.
At the very least, it should be amusing to see how some of those boards justify their continued existence.