Report: Nebraska loses $141 million due to licensing
According to a new report published by the Pioneer Institute, the state of Nebraska took $36 million from citizens in occupational licensing fees in 2017. And because of the restrictions that licensing puts on the economy, the state lost $141 million that otherwise would have been a part of Nebraska’s economy.
How does this happen? Well, in a free market, the economy works like we learned in basic economics, there is supply and demand. As the supply or demand of a product changes, so does the equilibrium price. However, once you introduce distortions to the market such as taxes or regulations, it alters this ‘free market’ environment.
For example, there is a huge demand for construction and trade jobs in Nebraska. But because of the licensing and sometimes excessive educational requirements there is a distortion to the market. First, these barriers cause some of these positions to not be filled, which means fewer jobs. Second, transactions that would have occurred without the burdensome licensing laws do not occur due to the higher prices and restrictions that these laws create. And third, the opportunity cost of licensing laws means these employers or workers must choose to spend their resources on training and studying for exams instead of providing goods and services into the Nebraska market. All of this culminates in you as the consumer paying MORE for these services then you would otherwise.
And before you get all excited, NO, I am not saying we should get rid of all licensing. There are certain professions that need training and certifications. For example, a nurse. Nurses need training so they can provide the proper medical care to their patients. However, did you know that a massage therapist in Nebraska must have more hours of training than a nurse must have in clinical hours?! That doesn’t seem right…
Sometimes the licensing requirements are a bit over the top and need to be paired down. The state and local governments don’t need to create more economic barriers than absolutely necessary to protect public health and safety.