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States Take on Occupational Licensing Reform

Scrap recyclers are facing a skilled labor shortage just like most every other manufacturing industry.

Is a renewed focus on occupational licensing by state legislatures a response to the shortage? Or is it an aggravating factor making it harder for employees to obtain the proper occupational credentials to do their jobs? Some might say reform is welcomed news. But, not every approach is the same and there is concern among the business community that it could even further exacerbate the labor shortage problem employers are facing.

Why this matters: Occupational licensing reform has been a hot topic for state legislatures and both the Obama and Trump Administrations. Whether it is stories of hair stylists suing cosmetology boards over the regulatory burden placed on individuals struggling to make a living, or the risk one assumes by hiring an unlicensed contractor, lawmakers, and the public have been asking tough questions on what problems exist in the current structure and where states are moving on the issue.

* Since the 1950s, the percent of occupations covered by licensure has grown from 5 percent to more than 25 percent of the American workforce, with some states as high 33 percent of its workforce.

* In 2018, 14 states enacted 19 laws to reform either the state's requirements or procedures to obtain an occupational license.

But, but, but…Reform is a careful balancing act between safety and common sense. Critics believe occupational licensure acts as a “burdensome permission slip” from the government to make a living. However, those in favor argue licensure provides a way to set minimum quality and safety standards.

* A recent report from MultiState Associates (ISRI’s partner for state policy tracking) indicates that while most states enacted bills reducing the requirements and regulations of licenses, some reform efforts focus on addressing concerns certain demographics face when acquiring a license.

So, what’s really happening? The question for scrap recyclers is what impact this focus by state legislatures may have on the ability to find qualified employees that may require certain occupational licenses. Some might be surprised to learn that in this case the reform may be a good thing.

  • Among the states that sought general reforms to licensing requirements, Nebraska's bill (NE LB 299) set in place broad changes in reducing requirements for licenses by establishing a five-year review window for all state licensing laws and regulations.
  • Similarly, a pair of Virginia bills (VA SB 20 and VA HB 883) set a three-year pilot program for the Virginia Department of Planning and Budget to reduce compliance costs and requirements of occupational licenses by 25 percent.
  • As states also conduct criminal justice reform broadly, Delaware, Indiana, and Tennessee have addressed the difficulties of obtaining certain licenses with a criminal record by loosening requirements for those individuals.
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