Cutting red tape
Corianna Baier

The Missouri Legislature is currently considering bills that could change how the state deals with occupational licensing. Allowing people to work without arbitrary barriers is good for workers and consumers, promoting employment and economic growth. Now, a study suggests that occupational licensing reform could also be beneficial for public finance.

The study, from the Pioneer Institute in Massachusetts, concludes that completely eliminating occupational licensing would result in revenue gains for Missouri. The key is that there would be more tax revenue generated from additional people earning income than is currently generated in licensing fees. According to the study, allowing citizens to work without licensing restrictions would generate an additional $328 million in state and local tax revenue in Missouri. While Missouri would lose $150 million in fees collected from licensure, revenues would increase by about $178 million. Basically, complete licensing reform would more than “pay for itself” in Missouri (as well as 28 other states listed in the study).

Though this study examines the complete repeal of all licensing, no one has yet proposed that in Missouri. However, it’s interesting to think of licensing reform through the often-overlooked lens of public finance. Government officials seem to be hesitant to eliminate a source of revenue, but this study suggests an elimination of fee revenue may not reduce total revenues.

The licensing reciprocity bills proposed in the Missouri Legislature are much more modest than the reforms suggested in this study, but they present exciting economic opportunities for Missourians. This study adds to the overwhelming evidence that it’s time to rethink Missouri’s occupational licensing.  

About the Author

Corianna Baier
Corianna Baier
Analyst

Corianna grew up in Michigan, where she earned her B.S. in Economics from Hillsdale College.