Red Tape of Occupational Licensing Leaves West Virginia Workers in the Red
Amid a legacy of low workforce participation rates and a struggling economy, state legislators could easily change the fortunes of West Virginia workers by cutting the red tape around its occupational licensing laws. Not only does the Mountain State license more occupations than its neighbors do, more West Virginians need a license to do their job than the national average. Even when applicants have met all the qualifications for a license, they are sometimes still barred from working because of arbitrary criteria.
Occupational licensing laws are like a permission slip to work from the government and cover dozens of industries, from jobs like athletic trainers to construction workers to foresters and hair stylists. Licensing laws raise costs for consumers without clearly protecting the public health and safety. Working without a license in a licensed occupation can lead to criminal penalties and even jail time – and people who already have some kind of criminal record face a rigged system from the start. Even after they have paid their debt to society, these workers can be arbitrarily barred from licensed occupations, no matter how long it has been or whether their offense had anything to do with the occupation in question. West Virginia’s incarceration rate, which is about a third higher than the national average, means even more people are impacted by these “collateral consequence” laws.
High licensing barriers can have other unintended consequences, such as raising recidivism and decreasing the number of small businesses in the state that might employ more workers. A significantly smaller share of younger workers work in licensed occupations in West Virginia than nationally, which can encourage people to leave the state altogether in search of a better future elsewhere. Licensing can also disproportionately bar workers of color from well-paying occupations, compared with their white peers. When nearly a quarter of West Virginians need a license to do their job in the state, collateral consequence laws make it doubly difficult for people to rejoin the workforce and participate to their full potential.
Our new report on West Virginia’s collateral consequence laws for occupational licensing outlines what West Virginia has done right – and how it can improve outcomes for workers in the state in comparison with its neighbors. Ohio and Indiana provide helpful models for reform, including limiting vague policy language and the power of discretionary licensing boards. Indiana also supports due process for workers applying for a license by letting them petition boards for a determination of whether their history disqualifies them before they invest years and thousands of dollars into a license they will not be allowed to have.
West Virginia legislators made some improvements to the state’s system of collateral consequences in 2019 (HB 118) and 2020 (HB 4353 and HB 4352), but West Virginia still lags behind its neighbors. Future legislation could limit how much discretion licensing boards have over workers’ futures by expanding the previous reforms to include all occupations and by raising the standard for rejecting an applicant to cases where a person’s criminal record is directly related to the occupation instead of the current vague “rational nexus” standard. West Virginia could also report data on licensees with criminal records, including how many people applied for the license and how many were denied. Data like these could be helpful to legislators considering other similar policy reforms.
With a lower labor force participation rate and a higher unemployment rate than any of its neighboring states, the Mountain State still lags behind its neighbors on improving opportunities for its residents. With higher licensing burdens and incarceration rates, West Virginia could improve the fortunes of countless people by simply making it easier for people to reach their full potential through meaningful work.
Darwyyn Deyo is an Associate Professor of Economics at San José State University, a Senior Research Fellow with the Knee Center for the Study of Occupational Regulation at West Virginia University, and a Public Voices Fellow of The OpEd Project. Jessi Troyan is the Director of Policy and Research at the Cardinal Institute for West Virginia Policy.
