From Impeding to Empowering Entrepreneurs: A Review of State Occupational Licensing Laws

Jul 25 2014

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Job churn has slowed in recent years, and labor force participation has declined among the young and prime working-age individuals. Expanding firms are adding fewer jobs on average than they have in the past. The Brookings Institution finds that overall “business dynamism,” the continual process of businesses opening, closing, expanding, and failing, has slowed over the last few decades, which is cause for great concern since entrepreneurs play a critical role not only in this process but in net job creation. Whether these trends continue remains to be seen, but the Congressional Budget Office (CBO), the Federal Reserve, and many private economists expect a “new normal” of slow growth. Though most of what spurs innovation and job creation is outside of government purview, there are many things that policymakers can do to strengthen the foundation for entrepreneurship and job growth.

It is well documented that the cumulative effect of regulations is taking a toll on GDP growth, productivity growth, entrepreneurship and job creation, ultimately slowing improvements in living standards and making the American Dream more difficult to achieve. Occupational licensing is one state-level layer of that accumulative encumbrance that, if misused to benefit special interests rather than to protect consumers, has become particularly burdensome for many entrepreneurs and jobseekers.

 

See the entire JEC Republican Staff Analysis attached below:

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