Rhode Islanders Dream, Too. The right to earn a living in the profession of one’s choice without government interference is fundamental to each person’s freedom to fulfill his or her individual dreams and goals. In making Rhode Island a less friendly place to call home for Americans looking to fulfill a lifelong dream, to raise a family, and to build a career, our state government restricts that right by forcing too many of its residents to seek its permission and to overcome burdensome and costly barriers before engaging in meaningful work.
In a comprehensive national analysis of occupational licensing barriers for low-to-middle-income workers and aspiring entrepreneurs, a 2017 Institute for Justice report ranked Rhode Island among the 10 most widely and onerously licensed states. Already suffering bottom 10 rankings on the Family Prosperity Index (FPI), overall business climate, and on Jobs & Opportunity Index (JOI), Rhode Islanders should be provided with every opportunity to engage in gainful work.
Unfortunately, Rhode Island is becoming less of a “home of the free” and more of a “land that requires permission.” For many, the costly fees and training mandates that are irrationally and unfairly imposed on certain occupations presents an insurmountable barrier to engaging in a new profession. As one factor in its bottom 10 FPI ranking, the lack of opportunity to engage in prosperous work has forced tens of thousands of Rhode Islanders to move out of state, bringing with them billions of dollars of income earning potential.
Rhode Island’s dismal business climate, because of excessively high levels of taxation and regulation, keeps our state uncompetitive on a regional and national basis. Especially hard hit are low-income occupations for which earning a primary or secondary income is vital to family self-sufficiency.
A welcome and robust shared economy can lead to “shared” prosperity. It is widely held that the workforce of the future will little resemble that of our parents. Over the past 50 years, the concept of the lifelong company employee has given way to an increasingly mobile workforce, and now includes a significant portion of people who will patch together multiple lines of work into an overall living.
If Rhode Island wants to attract millennials and other mobile workers as a vital portion of its future workforce, it must implement major reforms to its current occupational licensing regime, so as to make our state a more opportunity-rich place to call home. An approach that openly welcomes the emerging “shared” and “gig” economies, as opposed to a tax and regulation approach, could make an immediate positive impact.
State’s lawmakers should resist the urge to over-tax these burgeoning economies, allowing them to grow to become vibrant and reliable sectors of our economy. Likewise, existing protectionist regulations that restrict competition in certain industries must be repealed, while frivolous mandates proposed in the future must be systematically rejected. Yet, already with a bottom 10 ranking in this regard, Rhode Island has recently imposed new burdens on new shared economies. This practice must end.
If significant reforms are enacted, more people will be free to engage in more and better lines of work, more and better incomes will be earned, more families will be culturally stronger and will remain in tact, more and better businesses will be established, more prosperity will be shared by more Rhode Islanders, and more working people will naturally give our state a better and more stable tax base.
Rhode Islanders should enjoy the right to earn a living. A right to earn a living means being able to find a vocation that balances your need for income with your skills and interests. If a consumer market exists for the product you create or service you provide, the government should not stand between you and those who would purchase your good or service. According to the Institute for Justice:
Nationally, occupational licensing is one the biggest issues in labor economics today. More than 25 percent of workers need a government-issued license to work. That represents a six-fold increase from the 4 percent rate of licensed workers in the 1950’s. It also dwarfs today’s rates of unionism at 11 percent of workers; and of minimum-wage earners at 2 percent of all hourly-paid workers. Over-licensing and regulation shrink the available number of jobs, lowers competition and increases prices to consumers by 15 percent or more.
This right to earn a living supersedes the progressive notion of a “living wage,” which implies that whatever work you do, you should be able to live on that income. Under this false notion and associated regulatory framework, employers would have less flexibility to hire workers and workers would have fewer options when it comes to choosing their occupations.
Instead, a truly moral economy is one that allows people more freedom to earn a living and put food on the table, while also doing work that they find fulfilling, and while fostering mutually beneficial societal interactions between vendors and customers. Such a system allows everybody to determine his or her own needs and interests.
In this sense, “regulations” can take many forms. In the broadest sense, the state government regulates when it restricts the otherwise free actions of Rhode Island businesses and individuals. If the state government decides, for example, that it is going to place broad restrictions on a new product, like vaping, it limits not only the liberties of Rhode Islanders as consumers, but also the commercial opportunities for such products for business owners. Taxation of specific industries or products is also a form of regulation, as economic disincentives inevitably restrict normal business and consumer activity, while creating an unfair and uneven playing field that favors the non-taxed industry.
Regulations: Rules & Statutes. There are two primary paths by which occupational licensing requirements and other business regulations are established:
- By “legislative” action (General Assembly statutes)
- By “executive branch” initiative (agency rules)
On the executive branch side, agencies are empowered by enabling legislation to unilaterally promulgate rules that govern each agency’s area of responsibility. However, until very recently, the agency rule-making process lacked a sufficient review and vetting process. This deficient process resulted in hundreds of rules and tens of thousands of pages of regulatory language that often lacked any cost-benefit analysis, that advanced political or philosophical agendas, and that ultimately imposed undue burdens on businesses and individuals who must comply with the rules … creating a negative business, employment, and overall economic impact.
On the legislative branch side, policymakers in our state have generally followed a “crystal ball” approach, when it comes to occupational licensing and other business regulations. In short, this approach attempts to imagine what perceived wrongs might happen in the future and then tries to pre-emptively regulate them.
Also, lawmakers are often swayed by protectionist trade organizations that seek to prevent competition in their industries by claiming new laws are necessary to protect the public from imagined health and safety concerns. Further, many public officials seek to tax almost everything that moves for no other reason than to add money into government coffers.
Combined, these heavy-handed legislative and agency approaches tend to limit investment and stifle innovation for everyone in the targeted industry. Such frivolous practices inhibit job creation and create downward pressure on our state’s overall economy. Even Rhode Island’s progressive Democrat Congressman David Cicilline has said that over-licensing “is nothing short of a weaponization of safety requirements against the economic security of working American families.”
R.I. Occupational Licensing Record
Occupational licensing — especially that which targets low-to-moderate-paying jobs — joins the worst aspects of both of these forms of regulation. The state tells families, looking to piece together a living, that they cannot engage in certain commercial activities without government approval, and that approval comes with a cost in time and money.
With technology increasingly allowing independent contractors to offer wide varieties of goods and services through a “gig economy,” the pain of licensing regulation increases — even more so if compared not just with the opportunities that our neighbors do have, but with the opportunities that they should have.
The Institute for Justice (IJ) has compiled a list of 102 occupations providing average-or-below income that are regulated in at least one state. Rhode Island proved to be the 10th worst state with respect to the reach and difficulty of its licenses. Of the 102 occupations, Rhode Island regulates 72 and is the only state that regulates conveyor operators.
Low-to-Moderate-Income Occupations Regulated in Rhode Island, Heaviest to Lightest
|RI Burden vs. Other Regulating States||Burden Rank Within RI||Occupation||States Licensed||Fees||Estimated Calendar Days Lost
|1||1||HVAC Contractor (Commercial)||37||660||2920
|1||1||HVAC Contractor (Residential)||35||660||2920
|15||3||Preschool Teacher, Public School||50||566||2555
|5||4||Sheet Metal Contractor, HVAC (Residential)||36||468||1825
|8||5||Sheet Metal Contractor, HVAC (Commercial)||37||558||1825
|14||6||Interpreter, Sign Language||22||700||1469
|4||9||School Bus Driver||51||180||1097
|25||10||Midwife, Direct Entry||28||1080||1095
|15||11||Security Alarm Installer||37||505||1095
|2||12||Bus Driver, City/Transit||51||170||730
|1||12||Truck Driver, Tractor-Trailer||51||170||730
|1||14||Truck Driver, Other||51||160||730
|29||19||Skin Care Specialist||50||100||140
|34||21||Emergency Medical Technician||51||205||26
|17||22||Child Care Home, Family||44||140||4
|1||26||Teacher Assistant, Non-Instructional||5||0||7
|36||27||Pest Control Applicator||51||45||0
|34||27||Vegetation Pesticide Applicator||51||45||0
|36||29||Fire Alarm Installer||39||462||0
|14||32||Carpenter/Cabinet Maker Contractor (Commercial)||25||200||1
|15||32||Carpenter/Cabinet Maker Contractor (Residential)||30||200||1
|14||32||Cement Finishing Contractor (Commercial)||24||200||1
|14||32||Cement Finishing Contractor (Residential)||30||200||1
|14||32||Door Repair Contractor (Commercial)||24||200||1
|14||32||Door Repair Contractor (Residential)||29||200||1
|15||32||Drywall Installation Contractor (Commercial)||25||200||1
|15||32||Drywall Installation Contractor (Residential)||30||200||1
|12||32||Floor Sander Contractor (Commercial)||22||200||1
|12||32||Floor Sander Contractor (Residential)||27||200||1
|16||32||Glazier Contractor (Commercial)||26||200||1
|15||32||Glazier Contractor (Residential)||30||200||1
|14||32||Insulation Contractor (Commercial)||25||200||1
|14||32||Insulation Contractor (Residential)||30||200||1
|15||32||Iron/Steel Contractor (Commercial)||26||200||1
|16||32||Iron/Steel Contractor (Residential)||30||200||1
|16||32||Mason Contractor (Commercial)||26||200||1
|17||32||Mason Contractor (Residential)||31||200||1
|13||32||Painting Contractor (Commercial)||22||200||1
|12||32||Painting Contractor (Residential)||28||200||1
|14||32||Paving Contractor (Commercial)||24||200||1
|13||32||Paving Contractor (Residential)||28||200||1
|16||32||Sheet Metal Contractor, Other (Commercial)||26||200||1
|16||32||Sheet Metal Contractor, Other (Residential)||31||200||1
|13||32||Terrazzo Contractor (Commercial)||23||200||1
|13||32||Terrazzo Contractor (Residential)||28||200||1
|13||59||Wildlife Control Operator||23||10||0
|47||61||Earth Driller, Water Well||51||200||0
|24||64||Gaming Cage Worker||29||185||0
|24||67||Coach, Head (High School Sports)||48||100||1
|26||68||Bill Collection Agency||31||100||0
|34||72||Security Guard, Unarmed||34||5||0
Not surprisingly, the Ocean State is particularly aggressive in regulating industries that tend to be heavily unionized, as exemplified by its having the worst regulations out of the tiny number of states (five) that regulate non-instructional teacher assistants. Interestingly, given the recent controversy over truck tolls, Rhode Island already imposes the most burdensome regulations on truck drivers, both tractor-trailer and “other.”
PROTECTIONISM BREEDS CORRUPTION
Government-conferred monopolies? The motivation behind many regulations is not always honorable or moral. Special interest groups, unions, and crony insiders often lobby for protectionist laws that restrict competition; they further seek to purchase advantage through generous quid pro quo campaign contributions.
According to the 2017 Institute for Justice report, “legislators rarely create licenses at the behest of consumers seeking protection from a demonstrated threat to health and safety from an occupation. Instead, they most often create licenses in response to lobbying by those already at work in an occupation and their industry associations … occupational licenses primarily benefit licensed workers themselves. In serving as a bottleneck on entry into an occupation, licensing restricts the supply of practitioners, allowing those who are licensed to command more in wages and prices for their services.”
While not usually illegal, such practices are nothing short of coercive corruption of the democratic process; and they do not serve the best interests of the public. Because of protectionist regulations, consumers often suffer from fewer choices at higher prices, and with fewer jobs opportunities available, while taxpayers must pay for the cost of regulatory administration and enforcement. The only people who benefit are the insider, established cronies who demanded protection for their line of business against unwanted competition.
Perhaps even more disturbing is the potential negative social effect, as many Rhode Islanders are subjected to fines or prosecutions for violations of obscure laws of which they were not even aware. Suspended or revoked licenses to work (perhaps resulting from post-facto changes in laws or regulations), excessive fines and penalties, government seizure of business or personal inventory, assets or cash, and even incarceration are highly destructive to individual and family prosperity, inhibiting people from being able to earn a self-sufficient living and can tear families apart both economically and emotionally.
In addition to the hard costs of compliance for employers and entrepreneurs, enforcement of frivolous occupational licensing and regulatory mandates also imposes a high cost on taxpayers. The administrative costs to monitor, review, and issue citations for violations can often outweigh the perceived benefits of the regulation in the first place. Further, the cost to prosecute and potentially incarcerate unwitting violators adds to the bill that taxpayers must pay to maintain the judicial and corrections agencies of government.
Conversely, the goal of an effective regulatory strategy, executive or legislative, should be to ensure that occupational licensing is no more burdensome than needed to address present, significant, and substantiated problems. Under a “light touch” approach that seeks to achieve policy goals by the least restrictive means possible, businesses would be freer to develop and produce jobs, while individuals would be freer to begin new careers. With an emphasis on market freedom, bad actors will either be naturally forced out or can be fined, censured, or criminally prosecuted under the existing and lighter regulatory framework.
Only when and if systematic and documented abuses occur, or when legitimate and immediate public health and safety issues arise, should regulations be considered. Even then, multiple intermediate steps can and should be taken before occupational mandates are actually imposed.
FAMILY PROSPERITY INDEX CONNECTION
As has been clear for nearly a decade, Rhode Island’s incessant loss of residents to other states represents a loss of the “productive class.” By this term, we mean households on the cusp of the middle class — the sorts of families that are eager to turn their time and their talents into income and material wealth by producing in one way or another. The “productive class” represents those elements of the social body who have incentive to work or invest in the means of production, and as the FPI teaches us, to pass-on those values to their children and larger family.
Occupational licensing and other regulations restrict opportunity for many in Rhode Island, inadvertently encouraging outmigration and increasing population loss, one reason for our state’s poor performance on the Family Prosperity Index (FPI). While no factor affects the FPI as profoundly as marriage, which provides the foundation for family members to turn their time and talents into income, regulatory barriers prevent Rhode Islanders from working, thus increasing pressure on marriages and decreasing the likelihood that a work ethic can be firmly established in the family unit.
A lack of opportunity not only can break up families and push them out of the state, it can also cause them to delay or avoid having children. The stress of constrained opportunity puts pressure on marriages, and a lack of legitimate economic outlets increases a reliance on welfare programs and an inclination to engage in high-risk or illegal activity. Hopelessness reduces the incentive to pursue education and raises the tendency to engage in self-destructive behaviors.
Each of the following categories of the Family Prosperity Index below, where Rhode Island ranked in the bottom-third nationally in the 2017 FPI report, could be positively impacted if the easing of regulatory burdens would lead to greater numbers of working Rhode Islanders as well as more economically and socially secure family environments:
Entrepreneurship and Unemployment: more people working or starting a new business would increase
Population Under 18, Children in Married-Couple Households, and Births to Unwed Mothers: a more stable family economic foundation would make it easier to have more children within married households
Out-Migration: with more work opportunities, more people will remain at home in Rhode Island, instead of moving to other states in search of better opportunities
Medicaid Spending: with more people working in self-sufficiency, fewer people would join the Medicaid rolls
Risk Behavior: fewer people would feel the urge to engage to risky behavior if financial and family circumstances were more stable
EXAMPLES OF FRIVOLOUS OVER-REGULATION
Considering the standard that occupational licensure should only be implemented when legitimate health or safety issues are involved, a common-sense approach would make one wonder why any reason other than pure protectionism or cronyism might be behind the following Rhode Island regulations:
Hair Braider Freedom: One of the more absurd occupational licensing mandates in Rhode Island is a statute that requires natural hair braiders, who use no chemicals or sharp tools, to engage in thousands of hours of irrelevant cosmetology training and pay hundreds of dollars in tuition and other fees in order to to receive permission from the government to legally work in a field that presents no safety risks.
Such obviously misguided licensing burdens are especially harmful to people who would prefer to start new careers and earn paychecks instead of receiving welfare checks. In recent years, many states, understanding the anti-commerce nature of such protectionist policies, have moved to reverse similar anti-jobs mandates. Yet, Rhode Island lags behind: In 2017, a bill to repeal this mandate (H5436), supported by the multi-partisan RI Families Coalition, unanimously passed the House of Representatives but for unimaginable reasons was never taken up by the Senate.
Sign Language Interpreters: What public harm might occur if sign-language interpreters were not required to obtain government permission to work, after paying $700 in fees and engaging in 1,469 hours of training?
Pet Groomers: Still other emotionally-generated regulations are promulgated by “do gooder” lawmakers, who in knee-jerk responses to an isolated accident or incident, brag that they solved a ‘perceived’ problem that doesn’t actually exist, by slapping a license on an entire industry. In 2017, legislation (H6054) was introduced to impose a license on pet grooming businesses, with penalties for those that don’t comply. A few years ago, Rhode Island businesses in this industry were made less competitive with their counterparts when the sales tax was applied to their service. A state licensing fee for pet groomers, which will not solve any real problem, will only make these businesses less competitive. Anecdotally, it has been reported that many Ocean State pet grooming businesses have closed down or move across the border in to Massachusetts ro Connecticut.
Minimum Corporate Tax: As referenced above, taxation can also amount to regulation. Just as every action that the government forces businesses to undertake comes with a cost, as a sort of indirect tax, so too does paying a direct tax become another burden. Rhode Island’s corporate minimum tax, though relatively small, is a particularly irksome example. Profit or lose, every business must write a $400 check to the state each year. While this annual regulatory tax has been reduced from $500 in recent years, it serves no purpose other than a being a blatant “money grab” and should be fully repealed.
Mens rea / Criminal intent: Given the myriad laws and regulations governing which acts of commerce the government permits, and which acts is does not, no person should be convicted of a crime without the government proving that he or she intended to violate a law or knew that his or her conduct was unlawful (criminal intent or mens rea). Generally, criminal offenses under Rhode Island law include such specific standards, but if they don’t, then a default requirement should apply. The Rhode Island Center for Freedom & Prosperity supports state efforts to protect citizens from unjust punishment because of ambiguous and poorly-drafted criminal offenses.
Therefore, the Center recommends legislation, similar to what it advocated for in 2013, that would protect employers, workers, and other individuals from unjust prosecution.
Civil asset forfeiture: One of the most extreme circumstances where the government often violates the constitutional rights of the people is when it unjustly seizes the property of private citizens, and makes it exceedingly difficult for them to reclaim what is rightfully theirs.
The State of Rhode Island was recently graded at a D- in a national report by the Institute for Justice for its weak civil forfeiture laws, which represent one of the most serious assaults on private property rights in the nation today. Under civil forfeiture, if an individual or business is suspected of violating the law, the government can seize your cash, car or other property, sell it and use the proceeds to fund agency budgets – often without so much as charging you with a crime. In Rhode Island, “probable cause” is the very low bar the government has to clear in order to justify the seizure of private property, while a “preponderance of evidence” burden – or a very high bar – is placed on the property owner, who may have never actually committed a crime, to reclaim what is rightfully theirs:
According to state law, “In any action brought under this section, the state shall have the initial burden of showing the existence of probable cause for seizure or arrest of the property. Upon that showing by the state, the claimant shall have the burden of showing by a preponderance of evidence that the property was not subject to forfeiture under this section.
It has become an increasingly harmful condition that the prevailing assumption in Rhode Island is that businesses and workers need to be prevented from conducting perceived public harm, and must be closely regulated. In an over-regulated economy, with little protection for legitimate business people who may unknowingly violate some obscure statute or regulation, and with overly liberal private property seizure laws, the climate for business owners, entrepreneurs, workers, and private property owners is fraught with danger. In short, private property or money can be seized by the government without a crime ever have been committed.
Therefore, legislation is recommended that protects individual liberty and property rights by standardizing forfeitures across all crimes, simplifying procedures, and addressing counterproductive incentives in the law that distort policing priorities.
PROGRESS SHOULD NOT BE DENIED
It is a fact of life, and of industry, that new technologies and new services will provide competition for existing providers. It is only natural they should want to protect their livelihoods. But caving in to any special interest group creates an economic drag and inhibits progress for society on the whole. Unfortunately, as evidenced by its bottom 10 occupational licensing ranking, Rhode Island has a poor track record in this regard and has become a protectionist state. Such restrictive practices leave residents with fewer options for many products and services, and at higher costs, as compared to what a true free market would offer.
Vaping Regulations: In the cigarette industry, the politically correct anti-big-tobacco movement is leading to the suppression of individual rights and healthier choices, as innovation is being purposely ignored, through harmful restrictions and outright bans on legal products.
In recent years, major technological breakthroughs have made smoking new tobacco products much less harmful than traditional cigarettes, yet many municipalities and public institutions are seeking to effectively ban their use, robbing consumers of their right to healthier lifestyles, disrespecting personal choice, and prohibiting entrepreneurs from their right to earn a living.
Despite the fact the State of Rhode Island retains authority to regulate traditional tobacco products, anti-tobacco fanatics are attempting to attack “flavored” tobacco products at the local level, claiming they are particularly attractive to students and children.
The city of Johnston and the town of Middletown, in 2017, each passed regulating ordinances that would ban the sale and marketing of flavored tobacco products, including legal (electronic) e-cigarettes. Citing the need to protect school children, the localities prohibited the sale of such products for all of its residents, including to legally aged adults, in any of its stores, even though the sale of tobacco products to minors is already illegal. The capital city of Providence similarly passed a ban a few years ago, as have a handful of other Rhode Island municipalities.
Legal Action in Progress: In Johnston, a lawsuit has been filed in Providence Superior Court by a group of retail store owners who claim that municipalities do not have the legal authority to regulate tobacco products, as that authority rests solely with the state. In January of 2018, the Rhode Island Superior Court in Newport County ruled, based on a notification technicality, that the Middletown ordinance banning tobacco sales could not be enforced pending further action of the court.
Similarly, the University of Rhode Island is seeking to implement a ban of all tobacco product usage anywhere on its campus, including e-cigarettes.
History shows us that such heavy-handed attempts are futile, as smokers will either legally purchase products in other cities or states or will descend into in the growing illegal “underground economy.” The only people who will suffer will be adults who have lost their right to purchase products as they choose and business owners who sell the tobacco products as part of their livelihoods, sometimes representing as much as 30% of all sales.
With even newer technology based tobacco products already on the horizon, such as the IQOS “heat, not burn” cigarette, which eliminates up to 90% of the health risks of smoking, society would be better off if healthier choices were not systematically beaten down by rabid advocates and anti-business governmental overreach.
Ocular Telemedicine: One emerging new economy is the online “telemedicine” industry, including ocular telemedicine. The benefit is that certain medical diagnoses and prescription refills can be safely conducted online, saving patients money and often eliminating the need for time-consuming repeat trips to the doctor’s office.
In Rhode Island, legislation was introduced in 2017 to “protect” traditional brick-and-mortar eye-doctor practitioners against a new online ocular industry service. Without such restrictions patients can have their contact-lens refills re-prescribed, and even purchased, online after a simple test on their own computers, in the comfort of their own homes. The legislation would restrict consumer access to ocular telemedicine by requiring prescription exams to be conducted only at eye doctors’ offices during costly exams.
In banning a technology that can provide affordable, high-quality eye care for Rhode Islanders — particularly for poor and rural residents — this legislation is an assault on the free market, innovation, and common sense. This is the type of protectionist legislation that will only worsen Rhode Island’s image as a consumer-unfriendly state in which to raise a family and as a hostile place to build a forward looking career.
Skyway Robbery: In the summer of 2017, the Rhode Island Airport Commission (RIAC) unilaterally and without any approval from the General Assembly imposed what amounts to a minimum $6 fee for all ride-sharing pick-ups at TF Greene Airport, forcing Uber and Lyft drivers to enter and pay for tickets in the short-term parking lot when picking up passengers at the mandated location. Whether the fee was implemented as a RIAC money-grab or in order to protect the taxicab industry, this agency regulation will have a negative economic impact on the emerging shared economy. Both entrepreneurial ride-share drivers seeking to earn a living and passengers concerned about expenses will lose.
A solution that preserves opportunity and parity by creating a level and competitive playing field, would be to for RIAC to treat the new ride-sharing companies the same as they do traditional taxicab companies, imposing similar airport access fees and passenger pick-up policies and deregulating both industries to equitable levels.
Home Rental Sales Tax (failure) – In 2015, the state government created a new tax, applying the 7% sales tax and the 1% local hotel tax to short-term rentals. In some cases, these are rooms rented through innovative online sites like airBnB, but the tax captured, for the first time, vacation rentals managed by realtors or the property owners themselves. The plan was promoted mainly as a source of revenue: $7.1 million in the first year, with $5.4 million of that from the state sales tax and local hotel tax alone.
By February of the following year, just $1.6 million had been collected, and the revenue take remains well below estimates. Extrapolating from the 1% local hotel tax cash collections, state and local governments took in just $2.0 million in the first year. Even in the second year, with an improved economy, the annual revenue did not reach its FY16 revenue target even in FY17, when it took in only $4.6 million.
More importantly, every penny collected by the government is a penny that isn’t collected by Rhode Islanders attempting to scrape together livings and grow small businesses. In other words, state and local governments may have taken in $4.6 million to keep their operations going, but motivated small businesses and entrepreneurs lost $4.6 million that they could have redirected into the local economy as new expenditures and reinvested in their businesses.
Occupational licensing reform does not normally conform with the typical partisan or philosophical debates that engulf most issues. Rather, protectionist policies are normally a result of special interest lobbying and electioneering that supercede party affiliation.
Case in point: The Democrat Speaker of the Rhode Island House of Representatives, Nicholas Mattiello, in his prepared remarks to open the 2018 General Assembly session, said he wanted to “see more progress made in the area of regulatory reform.” The RI Center for Freedom & Prosperity, following the speaker’s lead, here offers policy concepts to reduce the burden on Ocean State businesses.
History teaches us that open, free-market competition produces the highest-quality and lowest-price options for consumers, as opposed to mandates that limit choice and stifle innovation. Private and voluntary-membership trade associations are an alternative to government licensure. Rigorous enforcement of general deceptive trade practice laws is an alternative to pre-emptive regulation. Safety inspections by government agencies or private associations are preferred over restrictive and narrow mandates.
On the broad scale, IJ has written model legislation designed to provide a guide for legislators and regulators as they assess the options for achieving objectives in the marketplace, requiring that it be done by the least restrictive means possible.
The Goldwater Institute places its emphasis differently, with model legislation that would empower the people of the state to file complaints against burdensome regulations, allowing the judicial system to determine whether the government has met the requirement to achieve stated goals in the least burdensome way possible. Goldwater has also worked out an option covering not only occupational licenses, but also complaints against permits, such as for building or sales. In these cases, Rhode Islanders would have some recourse if the rules are ambiguous and the process difficult.
Another option would be to require state and local governments to compile an annual regulatory budget, so Rhode Islanders could easily understand the cost of the regulations under which they live and follow the change from year to year.
Other possibilities leveraging the state’s Office of Regulatory Reform (ORR):
- Give citizens and organizations the ability to petition the ORR to review regulations that are already in effect, not just those that are proposed.
- Expand the process for ORR’s review of regulations created by the bureaucracy to cover a review of proposed legislation and, at least in an advisory capacity, quasi-public agencies and municipalities.
The State of Rhode Island should also continue to comb through existing licensing requirements and eliminate those that are overly burdensome or unique to Rhode Island. IJ’s list of low-to-moderate-income jobs in the table above provides an excellent starting point. For those licenses that officials determine to be absolutely critical, the General Assembly should create standards that keep the licenses legitimate purpose front and center. For example, all licensing boards should have super majorities of members of the public with no direct financial interests in the occupations that they are regulating so as to avoid regulatory capture — the term for when industry insiders take over the bodies that are supposed to be regulating them and use them to serve their own interests.
Additionally, an interstate compact, as the governor of South Dakota is planning to submit soon, would allow licenses to be portable across state lines, at least for limited periods.
Of course, the problem of over-regulation is much broader than occupational licensing, so the state government should tackle other policies that limit people’s ability to work and organize their activities in a way that is dictated by their professional needs, not government hoops, such as:
- Criminal justice reform, applying common sense to overzealous prosecution of people who might not know they are committing crimes (as through mens rea reform) and ensure that the effects of a criminal record do not unduly punish people well after they’ve served their time
- Civil asset forfeiture reform, protecting people from confiscation of their property even if they are never charged with crimes
- Elimination of the corporate minimum tax, which imposes one more burden on workers if they organize their work in any other way than as employees, contractors, or sole proprietors — even if they lose money
Similarly, opening up opportunities for innovative ways of working, as in the so-called “gig economy,” can protect Rhode Islanders’ right to earn a living, including:
- Hair Braider Freedom: Eliminate the requirement that natural hair braiders must pay costly feed and undertake thousands of hours of irrelevant cosmetology training in order to legally earn money in this harmless practice
- Eliminating sales and hotel taxes on people who offer short-term rentals, independently or through online services like AirBnB
- Eliminating roadblocks to independent services, such as the airport’s prevention of ride-sharing drivers (working through Uber, Lyft, or similar apps) from picking up their customers without first entering the paid-parking lot
State officials should also review and eliminate unjustified legal or regulatory barriers to “telehealth”, an emerging new industry that improves medical outcomes and saves money.
Kill the ‘Ocular Telemedicine ban’ legislation: With legislation expected to be reintroduced in 2018, Rhode Island lawmakers need to see through the optometry cartel’s attempts to kill innovation and competition. At-home vision testing technology can empower Rhode Island families and individuals to get the prescription vision-aids they need at lower cost and with more ease than ever before. Thankfully, this type of protectionist legislation has fared poorly in other states. In the past year, similar bills that kill competition and cost eye care customers more time and money have been shot down across America; New Mexico Governor Susana Martinez issued a veto as did then-Governor of South Carolina Nikki Haley, who stated the bill, “uses health practice mandates to stifle competition for the benefit of a single industry … putting us on the leading edge of protectionism, not innovation.”
More broadly, still, Rhode Islanders should push their government to relent in its bias against new products that are in some ways similar to existing products, but don’t share their baggage. For example, new nicotine delivery systems, like vaping, do not have the same personal or public health concerns as smoking and should not face the same prohibitionist vigor.
GENERAL ASSEMBLY SHOULD FOLLOW EXECUTIVE BRANCH LEAD
In February 2015, Governor Gina Raimondo signed an Executive Order (15-07) building on the work of prior governors and directing the state Office of Regulatory Reforms (ORR) to review new and existing agency rules to determine if they are necessary and not overly burdensome, using policy and cost-benefit analysis. A comprehensive report is expected to be publicly released in early 2019, following the launch of the Rhode Island Code of Regulations (RICR). The ORR report will provide a summary of two-year review process of every state regulation and will make recommendations for further areas of reform, including amendments and repeals of regulations, potential dealing with regulatory parameters or with penalties.
Sunrise Provisions. It is recommended any regulatory process be implemented to ensure that proposed new regulations are actually needed and structured properly, via a rigorous vetting process, including analysis of statements of need and costs-versus-benefits, before any new regulatory proposal sees the light of sunrise.
The governor’s executive order also took a major step in this direction by establishing a more thorough “gatekeeping” process by which new agency rules will be considered in the future. Prior to the executive order, agencies could promulgate rules simply by dreaming up and writing the proposed rule, making it available for public comment via the Secretary of State’s office without any documentation of need and benefit and implementing the rule as law unless immense public pressure forced reconsideration. This process often lacked any serious public awareness or debate or any legitimate cost-benefit analysis.
After the 2015 executive order, regulations must receive ORR approval to proceed at two critical junctures in the process, before any proposed rule can see the sunrise. First, ORR is required to review the initial language and cost-benefit analysis and provide initial clearance before any proposed agency rule is put forward for public comment. Second, ORR is required to review public comments and work with agencies on appropriate language changes before granting final clearance to file the the regulations with the Secretary of State’s office. A similar process exists when a public petition is filed to repeal an existing agency regulation.
A similar sunrise provision is recommended to vet future legislative regulations.
Neither trade specialists nor any other occupations need validation from the government to achieve “professional status.”
Thousands of professions, such as college professors, do not require licenses. Legitimate businesses should not require protectionist favors to be showered on then from the government in order to thrive. And individuals who seek to engage in gainful work should not have to overcome excessive barriers or receive permission from the government in order to earn a living.
Sunset Provisions: One effective process to eliminate outdated or frivolous regulations is to implement a “sunset” provision. Under such a provision, unless agencies or legislators “re-submit” existing regulatory language in a more simplified form, along with a valid statement of need and cost-benefit analysis that is reviewed and re-authorized, the statute or regulation would become unenforceable or repealed outright.
Again, the State of Rhode Island has taken a positive step in this direction. As part of the revised Administrative Procedures Act (APA), passed by the General Assembly in 2016 (H7395/S3015) and enshrined into R.I. General Laws R.I. § 42-35-5(b): “Any [agency] rule that is not resubmitted by December 31, 2018, and is not published in the code of state regulations, shall not be enforceable until the rule appears in the code of state regulations.”
While a more aggressive sunset rule would include addition of a thorough cost-benefit analysis, the General Assembly is encouraged to pass a similar provision that might automatically sunset outdated legislatively mandated regulations.
Petition to Repeal: When individuals or businesses are unfairly affected by poorly written or politically motivated regulations, there should be a defined process by which citizens can petition their government to review and potentially repeal certain regulatory mandates … and receive fair and unbiased consideration.
The APA revisions of 2016 allow for any person to petition an agency to review and potentially repeal an existing agency rule. The state has also provided an online “Business Suggestion Box” whereby business can provide feedback on regulations. A stronger provision would allow Rhode Islanders to petition ORR directly for a review of rules.
Likewise, the General Assembly should set strict standards for a rigorous committee review process so that citizens and sponsoring lawmakers who submit legislation to repeal or reform specific legislative regulatory statutes can have confidence that their appeals will be handled in a serious and deliberative process. Such standards should include confirmation of a viable statement of need and a thorough cost-benefit analysis.