Wisconsin should join states that have enacted sunrise laws as an alternative to new licenses that fence out workers and don’t protect public

By Julie Grace for The Badger Institute
 
More than one million Wisconsinites today need a state-issued license in order to work in their chosen professions. As policymakers in Madison created dozens and dozens of new occupational licenses in recent years, they often did so without assessing the impact on workers, consumers, the economy or public safety. A new bill in Madison would change that.
 
Many Wisconsin workers struggle to complete the often costly and time-consuming requirements associated with occupational licenses. Others are discouraged from entering certain fields entirely.
 
Research shows that occupational licensing leads to fewer jobs, creates higher prices for consumers, disproportionately affects low-income households and hinders worker mobility. Despite these findings, the number of occupational licenses has increased dramatically, now affecting nearly 30% of U.S. workers, up from just 5% in 1950.
 
The new bill, described as sunrise legislation, aims to equip legislators with more information on the effects of a proposed license and ensure that occupational licenses are used only for their intended purpose: to protect public safety. The bill would create a substantive review process (a “sunrise review”) for any proposed new licenses in the state.
 
The process would evaluate a few key factors: whether the unregulated practice of the occupation would harm the public, whether the public can be expected to benefit from a new license, the least restrictive regulation that would protect the public, a comparison of licensure requirements for that occupation in other states and an estimate of the financial burden imposed on individuals or businesses involved in the profession. 
 
Even if some type of regulation is justified, imposing a license — the most-restrictive form of regulation — on a profession is harmful to Wisconsin workers and consumers. The alternatives to an occupational license included in this bill still would protect consumers without establishing high barriers to entry into a field. 
 
Other states have implemented similar laws with success. A 2015 report from the Obama administration points to sunrise reviews as an effective framework for occupational licensing reform. It highlights states such as Florida, which restricts licensing to instances when “the overall cost-effectiveness and economic impact of the proposed regulation … will be favorable” and “other types of less restrictive regulation would not effectively protect the public.”
 
States such as Arizona, Maine, Minnesota and Nebraska all have passed sunrise reviews.  Colorado established a sunrise review in 1985. By 2005, 109 proposals for new occupational regulations had been submitted. Licensing was recommended in 12 instances, and the legislature ultimately created a new regulation in only 19 instances.
 
Occupational licensing should not be viewed as a binary decision (to license or not to license). There are other entirely appropriate consumer protection options that should be considered. A sunrise review can equip legislators with the necessary information to make these important decisions on behalf of Wisconsin workers and consumers.
 
Julie Grace is a Badger Institute policy analyst.