Kauffman Foundation Policy Director Warns State on Licensing Laws

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Kauffman Foundation Policy Director Jason Wiens submitted written testimony to the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy in Sacramento, Calif. Wiens’ testimony focused on the barriers that occupational licensing poses to new business formation—a catalyst for economic growth and job creation.

“If one thing is clear from the data, it is that entrepreneurship cannot be taken for granted. The policy environment matters,” Wiens wrote. “Put simply, occupational licensing fences out entrepreneurs. When states regulate the practice of an occupation through the imposition of a license, the license creates a barrier to entry into the occupation or business. This ‘fence’ is not impermeable, but scaling it can be difficult.”

While there are legitimate reasons to license some occupations, the case is harder to justify for others, Wiens said in his testimony. He noted that states should “apply the appropriate protection at minimal burden. The lower and fewer barriers to entry, the better for entrepreneurship.”

Wiens highlighted policy tools that would provide less-restrictive alternatives to licensure, such as certification and registration. To ensure entrepreneurs can compete, Wiens recommended that policymakers:

  • Eliminate unnecessary licensing requirements.
  • Reduce the burdens imposed by licensure by lowering fees and scaling back educational requirements.
  • Reject special-interest proposals that hinder entrepreneurial competition.
  • Reform licensing boards to give greater representation to non-licensed practitioners.

View the full text of Wiens’ prepared testimony

Photo Credit: Flickr

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