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Blog: Paul Ryan's Regulatory Reform Proposals

Aug 07, 2014 | By Bethan Johnson, NETWORK Fellow

In recent years, legislation has too frequently forced people to stomach bad policies in order to gain necessary and life-altering improvements. Such can said about Representative Ryan’s proposals in the area of regulatory reform in Expanding Opportunity in America, a mixture of positive anti-poverty suggestions and unnecessary political tactics that have no place in proposals fighting poverty.

Half of the regulatory reform portion of focuses on the currently unjust burden placed on low-income workers seeking occupational licenses. Rep. Ryan highlights the arbitrary and burdensome nature of many licensing requirements—for example, he notes that Minnesota law requires more hours in the classroom for cosmetologists than lawyers.

Occupational certification often protects those already licensed and makes it particularly challenging for low-income workers to gain qualifications. The Institute for Justice explains that “hurdles are exceptionally burdensome for low-income workers” because the process of receiving an occupational license too often requires long hours and high cost, something most workers cannot always afford. By keeping requirements for a license high, license-holders protect their businesses from competition and indirectly continue the cycle of poverty.

Reforming occupational licensing is important. There has been a significant increase in the percentage of laborers in fields requiring state licenses: in the 1950s approximately 5% of workers were licensed; by the 1980s that number tripled to just under 18%; in 2014 roughly 33% of workers must be licensed.

Changing occupational licensing will significantly benefit people with low incomes and benefit our economy. One recent study shows that “licensing is associated with about 18 percent higher wages.” Also, more commonsense licensing requirements will provide more choices for consumers.

The other half of Ryan’s proposal is about “regressive reforms.”

Under the current regulatory system, federal agencies are granted the right to review and, at times, alter agency policies without congressional approval. It is this independence that Congressman Ryan objects to so strongly; it prompts him to argue that our model has bred “seemingly overzealous bureaucracy” that disproportionately harms low-income families.

It is important, however, to look at Ryan’s true intention.

First, whenever a federal agency intended to introduce or change a regulation, it would be required to conduct a three-part distributive analysis of the proposed change in order to assess its effects on low-income Americans. The first analysis would study which demographic bears the greatest cost because of the new regulation, with a particular focus on whether the proposed regulation would disproportionately burden people who are poor. This study would also be requi