Job Licenses in NJ Could Hurt More than they Help, Report Finds
Nearly 20 percent of workers in New Jersey needed the government's permission in order to land their job.
According to a report released Wednesday by the Institute for Justice, occupational licensing costs New Jersey tens of thousands of jobs annually, and millions or billions in lost economic value.
The libertarian nonprofit's state-by-state analysis ranks New Jersey 21st for the percentage of workers licensed. For a number of positions, such as locksmith and animal control officer, New Jersey's in the minority of states that require a license.
"Workers in neighboring Delaware have more opportunity, more freedom, less restrictions, lower hurdles, before they can enter the workforce," said Lee McGrath, IJ's senior legislative counsel.
Fifteen percent of workers are licensed in Delaware — a lower percentage than every state except Georgia.
The report suggests licensing costs the New Jersey economy 80,890 jobs annually.
"There are people who see that the barriers to getting a job are too high, and they are fenced out by these legal requirements," McGrath said.
In an Institute report issued last year, New Jersey was found to require a license for 54 of 102 lower-income occupations. The average worker was found to pay $224 in fees and lose more than 400 days to education and experience requirements.
And because occupational licenses restrict competition, effectively giving licensed workers a monopoly, IJ's latest report argues that licensees can charge more for their services.
Consumers and the wider economy pay a price of $473.9 million, according to the report's conservative estimate.
McGrath said less restrictive alternatives to licensing, such as regular inspections or private certification, can offer consumer protection without restricting competition and imposing a heavy cost burden.
There is little empirical evidence, the report said, demonstrating a link between licensing and quality of service or health and safety.
These days, McGrath said, Internet review sites and social media help weed out companies and services that are incompetent or fraudulent.