In recent weeks, presidential candidate Hillary Clinton has been trumpeting what she calls her “Breaking Every Barrier Agenda.” The focus of this agenda includes efforts to “support entrepreneurship and small-business growth in underserved communities” as well as “secure millions of new youth jobs and provide pathways of opportunity for young Americans.”
These pledges are admirable and timely, but the “solution” Clinton proposes is just disappointing: $125 billion in government spending. Our country has spent trillions on efforts like these, with little to show for it. The “War on Poverty,” for example, has cost $22 trillion but done little to reduce poverty. The simple fact is that more government spending doesn’t solve economic challenges — particularly those affecting young people and Hispanics.
Job creation that will allow young people and minorities to find employment is never going to be a result of spending that grows government. In fact, many such attempts by politicians have come with counterintuitive occupational licensing requirements that put jobs farther out of reach.
These licenses result in rising costs and more barriers to success. They apply to jobs at the state level, regulating everything from hair braiding to interior design to plumbing. The White House Council of Economic Advisors reports that occupational licenses affect roughly more than one fourth of the U.S. workforce.
Depending on the state and the profession, occupational licenses can impose time-consuming and costly requirements that make it harder for some people to even hold a job, never mind get started. A fully trained cosmetologist, for example, could still have to spend hundreds of dollars and months of time on government-mandated classes or at apprenticeship programs for skills they already possess.
There’s very little benefit from these licenses, but no shortage of negative consequences. Studies show that occupational licenses have negligible impact on the quality or safety of the jobs performed in regulated professions. Other studies, however, show that they reduce competition and increase the costs of goods and services sold in industries where licenses are required.
Occupational licenses and their stringent requirements fall hardest on the economically disadvantaged, the less-educated, and those with limited work experience. In other words, America’s youth and minority communities.
This is especially bad news for Hispanics like me. We are a much younger population than other ethnic groups, with one-fourth of us falling into the Millennial generation. We also tend to seek out entrepreneurial opportunities at a greater rate. A report produced by the LIBRE Initiative’s sister organization, the Libre Institute, found that one-out-of-five American entrepreneurs is Hispanic. Our youth and desire to be our own bosses, however, are hampered by occupational license requirements, which often apply to fields favored by those of us looking to start businesses of our own.
This helps to explain why Hispanic youth are having a harder time finding opportunities to succeed. The most recently released job numbers published by the Bureau of Labor Statistics show Hispanic unemployment at 6.1 percent — a full point higher than the general population. Worse yet, Hispanic youth unemployment sits at 16.8 percent.
Reforming and phasing out many state occupational licensing laws is a concrete way to reverse this trend. It’s certainly far superior to sweeping, grand announcements about “investing” in job growth, which really means spending taxpayer money. The right investment for elected officials to make is time in the communities they represent and work to get rid of occupational licenses, not to mention other examples of red tape that are holding entrepreneurs and jobseekers back.
It’s commendable to seek new ways for young people and Hispanics to contribute to our economy. But it doesn’t take massive amounts of money to make that opportunity possible — it just takes a careful look at which rules make sense and which ones don’t. Occupational licensing requirements, more often than not, are some of the many that don’t.
