Let's quit killing jobs in the Silver State
How legislators can remove obstacles to job creation
- Tuesday, December 11, 2012
Nevada's unemployment rate has lingered at unacceptably high, double-digit rates for nearly four years.
That uncomfortable statistic — reflecting deep human costs inflicted on many Nevada families — has led the state's political class to make much ado about promoting "economic development."
During the 2011 legislative session, for example, lawmakers created a new "state framework" for economic development.
Despite that outward show, however, legislators neglected several much more direct and immediate actions they could have taken to spur Nevada job creation and economic growth.
Chief among those missed opportunities was removing key obstacles to the state's aspiring entrepreneurs so small businesses could more easily incorporate and begin to hire workers.
In fact, lawmakers moved in the opposite direction: They imposed even more licensing requirements on individuals trying to carve out entrepreneurial businesses.
Now, for instance, individuals interested in offering "music therapy" services cannot do so without first appearing before a board populated by their would-be competitors.
Even if their begging before their competitors is successful, they must still pay fees for a state-sanctioned license before they can go to work.
Today, one in three American workers must obtain state-sanctioned licenses before they are legally allowed to go to work in their chosen occupation. That's up from one in 20 workers during the 1950s.
For many occupations that require licensing — such as hair-braiding, landscaping or interior design — consumers face no obvious threat of physical harm, which was the original rationale for occupational licensing.
Instead, occupational licensing today serves as little more than an anti-competitive scam, designed to place unnecessary barriers before people aspiring to start small businesses.
The Silver State has some of the most stringent licensing requirements in the nation. A recent analysis of state licensing requirements around the U.S. by the Institute for Justice says, "Nevada is among the top tier of most broadly and onerously licensed states."
The IJ report refutes politicians' frequent characterization of the state as a small-business paradise. Instead, it rates Nevada — because of its licensing requirements — as America's third-harshest environment for entrepreneurship.
Moreover, IJ observes, Nevada's licensing requirements are particularly burdensome for those working in low-to-moderate income occupations.
Before an alarm installer can go to work, for example, he must pay $1,036 in fees just to get the state's permission for him to earn a living.
Nevada is also only one of four jurisdictions that require interior designers to obtain a state-sanctioned license. And the state refuses to issue these licenses unless the worker has completed six years worth of educational or apprenticeship requirements.
In the 47 states that impose no licensing requirements at all on this occupation, the public has not been endangered by an epidemic of drapes mismatched against sofa cushions. So why does the State of Nevada insist on placing this barrier before individuals who want to work?
For occupations that pose no threat of physical harm to consumers if practiced by an inexperienced individual, licensing requirements should be removed. A competitive marketplace is the best regulator.
Other legislative reforms would also accelerate Nevada's economic recovery. Prevailing wage requirements unnecessarily eliminate construction jobs — reducing the number of public works projects that Nevadans' necessarily limited tax revenues can finance.
A recent NPRI analysis shows that prevailing wage requirements cost taxpayers about $1 billion over two years, 2009 and 2010. That was money that could have funded any number of important public needs.
Remarkably, even union-funded studies by prevailing-wage advocates show that repeal of prevailing wage requirements is associated with an increase in construction employment — an implicit admission that the requirements kill jobs!
Obvious obstacles to job growth are Nevada's overwhelming volume of state and local regulations, ordinances, zoning requirements and special fees and assessments.
Clark County, for example, recently passed rules to zone out street vendors and thus eliminate entrepreneurial opportunities for folks struggling to earn a living. And the City of Las Vegas passed new rules to block food trucks.
Governor Brian Sandoval has taken some nominal steps toward streamlining or simplifying the state's regulatory structure, but much work remains to be done.
When lawmakers return to Carson City early next year, they need to demonstrate some genuine sincerity about job creation — and start removing all the barriers they and their ilk have created.