Occupational Regulation - Office of the Legislative Auditor

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MINNESOTA OFFICE OF THE LEGISLATIVE AUDITOR Occupational Regulation SUMMARY Many separate state agencies and boards are responsible for occupational regulation. The statutory purpose of occupational regulation is to protect public health, safety, and welfare. Today there are almost 200 regulated occupations in Minnesota (not counting teachers’ licences), but many policy makers in Minnesota and across the country question whether occupational regulation is needed as often as it is used. Many occupations have been newly regulated in Minnesota in the last 25 years. Many separate state agencies and boards are responsible for occupational regulation, and it is difficult for legislators and others to provide necessary oversight to be sure the public interest is being served. An interim Senate subcommittee held hearings on occupational regulation in the fall of 1997, but no major action was taken during the 1998 session. In April 1998, the Legislative Audit Commission directed the Legislative Auditor to conduct a study of occupational regulation that would look at the effectiveness of the system as a whole. This study addresses the following questions: · What is the history of the policy debate on occupational regulation in Minnesota and other states · What constitutes Minnesota’s system of occupational regulation What occupations and professions are regulated and which state agencies and boards have regulatory authority How does the system of regulation in Minnesota compare with occupational regulation in other states · How effective is Minnesota’s system of occupational regulation Is the state’s policy on occupational regulation applied consistently How effective is Legislative oversight of occupational regulation Our overall assessment is that there are some problems with occupational regulation. But, generally, the problems we found are the same problems that have been uncovered and discussed in previous reports by others. Moreover, we do not think Minnesota has a crisis in occupational regulation. In our view, Minnesota today simply has many of the same occupational regulation issues that have persisted here and in most other states for decades.
x OCCUPATIONAL REGULATION We suggest ways to improve the administrative structure and procedures of occupational regulation. We do not, however, make recommendations on the core policy issues of “whether to regulate, and if so, how much.” Those are policy decisions that must be made by elected officials. And, we think the Legislature already has enacted into law good criteria for making those choices. The “key” is the Legislature’s willingness to apply those criteria more rigorously and consistently, both in deliberations on proposals for new or expanded regulation and in retrospective reviews of regulatory authority already enacted. Occupational regulation has been the subject of much criticism. A principal concern is that occupational regulation will “fence out” competition. BACKGROUND Occupational regulation is intended to protect the public, but it has been the subject of much criticism, both in concept and execution. Regulating an occupation through the imposition of entry requirements such as education, experience, and examinations necessarily restricts the number of individuals employed in the occupation. A risk of occupational regulation is that it will be used to “fence out” competitors, allowing those in the profession to charge higher prices. Several studies have found that occupational regulation is linked to higher prices, leading researchers to conclude that legislators should carefully weigh the costs and benefits of every proposal to regulate an occupation. 1 Over the years occupational regulation has received other criticism as well. Critics claim that it limits inter-state mobility, excludes marginalized groups from regulated professions, is controlled by the professions it is supposed to regulate, and does not vigorously investigate consumer complaints or discipline practitioners who are guilty of unprofessional conduct. Nationally, occupational regulation has undergone several reforms. Many states have increased the number of public members on their regulatory boards, which some studies show to have a positive impact on the responsiveness of regulatory boards to public interests. 2 In Minnesota, most regulatory boards have at least two public members, but some analysts of occupational regulation continue to call for increased public representation. 3 Another major reform effort has been the centralization or coordination of regulatory activities under umbrella agencies. Advocates of this reform suggest that centralization provides administrative efficiency, reduces the influence of professional organizations, and simplifies the process of legislative oversight of occupational regulation. In Minnesota various commissions, reports, and legislators have proposed forms of regulatory centralization, but no major changes have been enacted. 1 Carolyn Cox and Susan Foster, The Costs and Benefits of Occupational Regulation (Washington, D.C.: Federal Trade Commission, 1990). 2 Elizabeth Graddy and Micheal B. Nichol, “Structural Reforms and Licensing Board Performance,” American Politics Quarterly, 18 no. 3 (July 1990), 394. 3 Moris M. Kleiner and Mitchell Gordon, “The Growth of Occupational Licensing: Are We Protecting Consumers” CURA Reporter (Minneapolis: December 1996); L. J. Finocchio, C. M. Dower, N. T. Blick, C. M. Gragnola, and the Taskforce on Health Care Workforce Regulation, Strengthening Consumer Protection: Priorities for Health Care Workforce Regulation (San Francisco, CA: Pew Health Professions Commission, October 1998).
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