Utah Passes New Law To Prevent New Occupational Licenses

Amid growing labor shortages, barriers to entry cannot be ignored. And one of the biggest barriers today is occupational licensing, which affects around 1 in 4 American workers. To foster a more open economy, Utah Gov. Spencer Cox on Thursday signed an innovative bill that could stop the state from imposing new regulatory burdens.

Sponsored by Sen. Curtis Bramble and Rep. Joel Ferry, SB 16 strengthens Utah’s existing process for reviewing proposed new licenses and other occupational regulations. Called “sunrise review,” this process provides legislators with unbiased information and analysis, helping them make better decisions.

Under Utah’s existing sunrise law, adopted in 1999, the state’s reviewer is part of the legislative branch and is supposed to publish an annual report detailing all the sunrise reviews it conducts. Yet between 1999 and 2017 the state issued just two reports–on a total of three reviews. According to a new study from the Institute for Justice, “Too Many Licenses?,” Utah’s few reports are some of the nation’s most superficial, showing little evidence of any independent research or analysis.

But under the new law, SB 16 transfers sunrise review authority to a dedicated office, the Office of Professional Licensure Review, within the Department of Commerce. Not only will moving sunrise review authority from the legislative branch to the executive better shield reviews from the risk of political meddling, it could mean the state starts producing more thorough reports more often.

In addition, the Office will review every regulated occupation at least once every 10 years, to see whether they are necessary to protect the public. Evaluating existing regulations is certainly worthwhile, but it’s far more effective to prevent unnecessary new licenses from being enacted in the first place.

“Creating new licenses can make it illegal for some workers to continue earning an honest living in their field,” said Institute for Justice Legislative Counsel Meagan Forbes. “Strengthening the process to review requests for new licenses will ensure that Utah legislators think carefully before creating new barriers to jobs.”

Although licensing is typically defended as a way to protect consumer health and safety, all too often licensing only protects industry insiders from competition. Naturally, those insiders are usually the loudest proponents of new licenses. “Too Many Licenses?” finds that trade groups and other professional associations initiated at least 83% of all sunrise reviews nationwide. In sharp contrast, consumer advocates triggered just 4%.

Fortunately, in many cases, sunrise reviewers saw through these transparent attempts to muscle out potential rivals: Around 80% of reviews declined to recommend new licenses. More than half concluded that no new regulation of any kind was needed. Although state legislatures enacted 84 licenses that sunrise reviews rejected or failed to recommend, they also declined to enact 189, suggesting sunrise review may help slow the growth of licensing.

Thanks to SB 16, Utah continues to blaze a trail for economic opportunity. In recent years, the state made it significantly easier to become a licensed contractor in the construction industry, a credential that was previously harder to obtain than an EMT license. Utah also bolstered protections for people with criminal records who want to become licensed, banning boards from using irrelevant or old convictions as well as arrest records that didn’t result in a conviction to disqualify applicants. And the Beehive State has some of the nation’s best laws for opening a business selling homemade food, letting residents sell almost any type of baked, canned, pickled, or fermented food without any licensing or permitting requirements.

With a new and improved sunrise review process, Utah’s business climate could look even sunnier.