As we prepare for Labor Day weekend and celebrate the achievements of the American worker, it’s important to remember both the contributions and ingenuity of the American worker, but also look at areas where the state makes it more difficult for men and women to contribute to society. This is particularly important at a time of widespread labor shortages.
One of the biggest roadblocks in Mississippi, and every state in the union, is occupational regulations that require a government-issued license before you can work.
Mississippi requires licenses for 66 of the 102 professions that do not require a traditional 4-year college degree. From 1993 to 2012, Mississippi added licensing requirements for 49 professions, which was 18 above the national average. This ranks Mississippi as the 15th most widely licensed state.
Around 19 percent of workers in the state are required to obtain a license in order to work. The average licensed worker in Mississippi in these 66 professions pay an average of $130 in fees, spend 160 days in education, and take two exams, which is better than the average state.
Occupational licensing laws present significant costs for Mississippi residents. Because of the barriers to entry created by licensing requirements, economists have estimated that licensing reduces the number of jobs in Mississippi by 12,942. This helps contribute to Mississippi’s second-lowest labor force participation rate in the country.
Because of the reduced supply of workers offering their services, wage cost increases of 12 percent associated with licensing are passed on to consumers in the form of higher prices. Because licensing reduces the supply of workers and increases prices for the services that consumers receive, it results in less of the services being consumed.
Economists refer to the cost of the lost transactions that do not occur as deadweight loss. They estimate that the total deadweight loss from licensing laws in the state of Mississippi is $37 million.
Unfortunately, the total economic cost of licensing is even greater. Not only do some customers forego the more expensive services, licensing also causes a misallocation of resources between industries. For instance, people spend more
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