Once Little-Known, Job Licensing Is Now a Major State Issue

In 2016, an appointed state senator named Nicole Fox worked alongside Brandy McMorris, an Omaha hair braider, and attorneys from the Institute for Justice to craft legislation exempting the profession of natural hair braiding from Nebraska’s cosmetology licensing law.

The issue garnered only modest attention at the time.

Nonetheless, I was excited as I saw the bill move forward and become law with unanimous support, telling the Omaha World-Herald it was “a great win for entrepreneurs and small businesses.”

“How so?” some might ask. It’s fair enough to say most Nebraskans didn’t notice a significant difference in their well-being once natural hair braiding was delicensed.

But the issue of governments requiring an irrational amount of permission slips to work has been a fixture of free market policy at least as far back as the early 1960s, when Milton Friedman published his book “Capitalism and Freedom.” And despite this history, Nebraska and the Platte Institute were just beginning to grapple with the problem.

Two years later, with the continued work of my now-colleague Nicole Fox, the policy debate in Lincoln is catching on to the reality that excessive laws determining who can work in specific occupations are a serious factor for economic growth. Job licensing directly impacts a larger share of the workforce than even the minimum wage or unions.

And with that knowledge, licensing laws for numerous professions in Nebraska have now been revisited.

The licensing requirement that prevented Brandy McMorris from becoming a lawful hair braider in the first place—Nebraska’s state cosmetology license—will now be 14 percent less time-consuming for workers to obtain. That requirement, along with licensing for barbers, was reduced from 2,100 hours to 1,800 hours in a bill passed by the Legislature in April.

That requirement is still somewhat higher than most states, but the difference has narrowed significantly.  

Many other careers Nebraskans encounter on a daily basis now have less red tape applied to them, as well:

• Before reforms, audiologists and school bus drivers had to acquire two different types of permits or licenses to work in their professions. Now only one credential is needed.
   
• Reciprocity policies for health care professionals coming to Nebraska from other states, including relocating military families, were improved.
   
• Motor vehicle salespeople used to have to apply for a job license each year. That requirement was repealed. Bank officer licensing for employees at state-chartered banks was made optional.
   
• Public insurance adjusters and title examiners used to have previous experience requirements that were not necessary to practice in their specific professions. Now, instead of arbitrary requirements, the path to licensing in these fields depends on applicants demonstrating competency by passing an exam.
   
• And most recently, a number of animal massage professions; for horses, dogs, and cats, were completely delicensed and deregulated. This was a major departure from existing state policy, where Nebraska’s cumbersome massage therapy and veterinary licensing requirements had been so mixed up into other types of unrelated jobs that no Nebraskan was lawfully licensed for animal massage practice at all.

But if none of these changes appear to impact you, the general direction of lawmaking on job licensing almost certainly will. The fact that there was a government license to massage a horse or a dog or cat was a sign for many legislators that somewhere along the way, the state had lost track of what was being regulated and why.
  

That premise led to the passage of Legislative Bill 299, the Occupational Board Reform Act, which overcame significant industry and government opposition to become law in 2018.

LB299 establishes that each job licensing law on the books will be reviewed every five years. This review will include a process for determining whether less-restrictive occupational regulations could be used in place of licensure. Sometimes, the answer may be that the state should simply get out of the way. Other times there may be policies that can provide protections for consumers without unnecessarily limiting entry for workers.

Lawmakers will now begin an interim study to outline how to implement this process in 2019. Additional reforms also wait in the wings to return next session, including a waiver for first-time licensing fees for low-income applicants, military families, and young people.

The Nebraska Legislature is now part of a small group of governing bodies that has taken the lead on comprehensive job licensing reform, and many other states are taking notice. Over the next five years, leaders in Lincoln can use the Occupational Board Reform Act to improve our own economic climate and show the rest of the country how Nebraska works to make the Good Life possible.