One of the most difficult challenges facing occupational license holders in America is the lack of reciprocity. If license holders move to another state, their licenses don’t follow them, due to differing requirements.
This can cause upheaval for any family. The loss of income for a parent can be detrimental to a family. Training requirements for a license can take up large amounts of scarce time: take for example cosmetology, which takes around 350 days to become fully licensed in Texas.
Think about that. A cosmetologist moving to Texas from another state has to take a year-long salary loss in order to obtain a license she already has. Ridiculous!
This is an unfortunate reality for many professions in Texas, with over 650,000 licenses administered to more than 600 occupations. Keeping out of state folks from immigrating to Texas constricts labor supply thereby artificially increasing wages by an average of 15 percent. The result is Texas laws make goods and services more expensive than the free market, which makes consumers (and producers) poorer.
The evidence is clear: Texas’ barriers to entry for people in and out of the state create barriers to prosperity for all Texans.
Meanwhile in Arizona, legislators have passed legislation which would grant reciprocity to most license holders from other states with House Bill 2569. Doing this ensures that families moving to Arizona won’t be subject to overregulation by the state-created monopolies in licensed industries. Thus, newly-minted Arizonians can become productive workers immediately.
The Texas Model of limited government allows for abundant economic opportunity and prosperity, but Texas is ranked 21st nationwide in most burdensome licensing requirements. While seeing a significant and meaningful reduction in the amount of licenses would be ideal, the first step Texas can offer to prospective Texans would be following in Arizona’s footsteps and allowing for full reciprocity for all license holders.
Fortunately, Texas has already begun to offer reciprocity to a certain subset of the population. Senate Bill 1200 would allow for military spouses to receive full reciprocity for their licenses. This is a great step in the right direction, as it is vitally important to allow loved ones of our nation’s military to be able to practice their occupation without being penalized simply by moving.
But this rule shouldn’t apply to only military spouses. It should apply to all.
Texas shouldn’t disincentivize productive license holders from moving here. Texas should encourage them to do so because they will be able to prosper in a friendly entrepreneurial environment known as the Texas Model and Texans could enjoy their products and services. This would help improve upon our success.
Texas is not used to being beat by other states in terms of economic freedom, but Arizona has done it this time. If Texas makes meaningful reforms to occupational licensing soon, then prosperity will abound even more.