by Jon Riches

May 15, 2018

Discussion around regulatory reform and reducing the size and scope of the regulatory state seems to be intensifying nationwide.  This is an encouraging development.  But without comprehensive reform, regulatory burdens at all levels of government will continue to stifle innovation and prevent people from working.

That’s because many regulatory reforms target one-off regulations. That approach is a step in the right direction, but it’s politically challenging, laborious, and often does not target the heart of the problem.

The primary problem with the regulatory state is a problem of accountability.  Regulatory bodies know that they can create expansive rules, they can investigate borderline violations, and they can adjudicate close cases in their favor.  They know this because if their decisions are challenged in court, they will win.  And they will win in many cases because of either low judicial standards of review for certain types of economic cases, or because deference is provided to decisions from regulatory agencies, or both.

All of this results in more arbitrary rulemaking, more investigations and more findings of regulatory violations.  In other words, it results in bigger, more invasive government.  The result is the modern regulatory state.

That is why the Goldwater Institute has developed and seen enacted into law in Arizona some of the most significant pieces of regulatory reform in generations. These laws address the problem of accountability and thus one of the primary problems of the regulatory state.   They can also serve as a model for the rest of the country.

One such reform, the Right to Earn a Living Act, deals with overregulation in the area of occupational licensing. Occupational licenses are essentially permission slips from the government to let people work in a chosen field. Today, nearly one in three four jobs requires government permission before a person can earn an honest living.  (Fewer than one in twenty professions required a license 50 years ago.)

Many of these requirements have been challenged in court by entrepreneurs who point out that there’s no reason to think occupations such as florists or interior decorators are a threat to the consumer, but because of decades of bad judicial decisions, courts apply what is called “rational basis scrutiny” to these cases.  This requires judges to side with any decision by a licensing agency in all but the most extraordinary circumstances.

The Right to Earn a Living Act corrects this problem by requiring government to prove that restrictions on job-seekers are protecting consumers, rather than arbitrarily deprive hardworking people of their freedom.  In other words, it flips the presumption in favor of the job seeker and away from the government – the opposite of the current occupational licensing legal landscape.

Arizona was the first state to enact the Right to Earn a Living Act.  And although the measure has been law for less than one year, several other states have considered similar legislation.

This past session, legislatures in California, Colorado, and Louisiana all introduced versions of the Right to Earn a Living Act based on Goldwater’s model.  Florida also introduced a similar measure as a proposed amendment to its state constitution.

Many of these reform efforts were led by partnerships between Goldwater and other state-based public policy organizations, including Louisiana’s Pelican Institute and Florida’s James Madison Institute.  In Louisiana, many professions that are unlicensed elsewhere require a license – it’s the only state that requires florists to get government permission to arrange flowers, for example. New research from the Pelican and Goldwater Institutes point toward a pathway to reform. And Goldwater teamed up with JMI to explain how the State of Florida also has an opportunity to pass its own Right to Earn a Living Act as an amendment to the state constitution.

The right to earn a living and provide for oneself and one’s family is a fundamental liberty.  Government regulations that impair this right should be subject to heightened scrutiny, and regulators who make decisions harming someone’s job prospects should be held accountable.  The Right to Earn a Living Act provides for that accountability.

Arizona set an example as the first state to pass this measure.  The rest of the country should follow Arizona’s lead.  Some states are already off to a good start.

Jon Riches is Director of National Litigation for the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation and General Counsel for the Institute.