Labor

Forget the minimum wage – licensing reform will help lift Mainers out of poverty

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Despite its relatively minimal impact on Maine workers, the labor issue presently garnering the most attention in Maine politics is the minimum wage. In 2016, Maine voters approved a ballot measure that increased the minimum wage and eliminated the state’s tip credit, an issue that dominated discourse in Augusta during the first session of the 128th Legislature. As a result, there has also been numerous attempts to implement a training wage for young, unskilled workers.

Unfortunately, lawmakers have dedicated countless hours to minimum wage issues when just 2.7 percent of Maine workers are paid hourly rates at or below the minimum wage, a figure equivalent to the 2016 national average, according to the Bureau of Labor Statistics.

The minimum wage is an important issue – swaths of businesses testified in Augusta this session that the 2016 ballot initiative is putting them out of business – but the Maine Legislature has consistently rejected attempts to de-license occupations despite occupational licensing laws affecting a far greater share of Maine workers.

The de-licensing of occupations is relatively uncommon, both in Maine and across the US, as states continue to add additional occupational licensing laws to their books for professions that pose no legitimate threat to public safety. Only a few states have made breakthroughs by implementing major licensing reform laws – namely Arizona, Tennessee and Nebraska.

But Maine, like many New England states, has one of the highest rates of licensure among its workforce. A 2015 Current Population Survey shows Maine had the highest unadjusted rate of licensure in the US (30.2 percent) among employed workers. A 2016 Heritage Foundation survey found that “the states with higher concentrations of occupations that tend to be licensed are concentrated on the east coast, particularly in states with large shares of retirees and relatively weak economies, such as Maine, West Virginia, and Kentucky.”

Not only does a significant portion of Maine’s workforce have to be licensed, Maine requires licenses for far more occupations than most states. A 2007 report published by the Reason Foundation found that Maine licenses 134 individual occupations, the third highest total in the country behind only California and Connecticut. The study also noted that two-thirds of New England States (Connecticut, Maine, New Hampshire, and Rhode Island) are among the 10 most licensed states, with all four states licensing more than 110 professions.

In 2017, the Maine Heritage Policy Center found that Maine licenses at least 162 occupations, a figure that does not include aide, apprenticeship, associate, instructor, in-training, limited, temporary, or trainee licenses; when included, Maine licenses more than 200 individual occupations.

Occupational licensing is a policy issue that Maine must soon address. The harmful economic impacts of licensing must be reduced if Maine wants to give low-income individuals, members of our armed forces and women a fair shot at prosperity.

The lack of licensing reciprocity across state lines, for example, prevents service members and their families from instantly carrying on their work after relocating to a new state. A study prepared by the Truman School of Public Affairs at the University of Missouri found that the lack of reciprocity in occupational licensing limits interstate mobility and primarily affects employed women, who are more likely to hold certification or licensure than employed men.

Further, licensing has been proven to hinder entrepreneurship, particularly among low-income workers. A study by the Goldwater Institute found that “occupational fields that contain the most likely entrepreneurial opportunities for low-income workers are among the most heavily regulated in terms of state-required licensing and experience or degree requirements.”

In addition to stymying economic opportunity, licensing disproportionately impacts low-income earners by eliminating the low-cost goods and services they typically consume. Due to the lack of competition among professionals in licensed occupations, low-income consumers are forced to pay more for licensed goods and services when, in an unregulated market, new workers could enter the occupation and compete by offering services of a comparable quality at a lower cost.

Unfortunately for Maine, there was no bite at the apple in the second session of the 128th Legislature as it relates to occupational licensing. Moving forward, however, the Maine Heritage Policy Center remains committed to pushing the Right to Earn a Living Act and other occupational licensing reforms that empower Maine workers and remove barriers to economic opportunity.

If you have been negatively affected by Maine’s onerous occupational licensing laws, we want to hear from you. Reach out to us at contact@mainepolicy.org or email Mike Quatrano, Director of Civic Engagement at mquatrano@mainepolicy.org.

About Jacob Posik

Jacob Posik, of Turner, is a policy analyst for the Maine Heritage Policy Center. He can be reached at jposik@mainepolicy.org.

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