By Christopher LaBella and
James M. Hohman
Mackinac Center for Public Policy
Employers are having a hard time finding skilled workers, and lawmakers are trying to do something about it. They spend a lot on job training programs like the recent $55 million allocation to Going PRO, a program that provides awards to small businesses for employee development.
But there’s a better and cheaper way to close the skill gap: Get rid of the barriers that make it difficult for out of state workers to come to Michigan. It may even help grow the state population.
Going PRO is only one of the dozens of credentialing and job training programs operated by Michigan’s state and local governments. It’s been around for a decade now, and legislators have authorized $250 million to the program since its creation.
A better way for elected officials to enhance the pool of skilled individuals available to fill job openings is by permitting qualified workers to pursue employment in Michigan. Subjecting out of state licensed contractors to redundant training, testing, and fees limits the skilled labor market to only people who have gone through the Michigan bureaucracy.
Instead, legislators could enact universal licensing recognition, cutting the red tape and enabling Michigan to honor the licenses of individuals who have obtained professional accreditation in another state. This reform is increasingly noteworthy since states require a license for more jobs than ever before. About one in five jobs in the United States require an occupational license, up from one in twenty 50 years ago.
There is also an added benefit from license recognition. In addition to helping employers find workers, it would also help state population growth.
Michigan is struggling with population growth, which has been decreasing for the last three years. It has stayed at roughly 10 million people for the past 20 years while the rest of the nation added 45.6 million people, a 16% increase. In other words, Michigan lost out on a Philadelphia’s worth of population growth by not growing at average rates. The state isn’t going to get rid of its myriad job training programs any time soon. But instead of developing a declining share of workers through training programs geared toward residents, universal licensing recognition opens the state up to a growing and national workforce.
Indeed, some economists found that universal reciprocity states experienced an influx of individuals. The states that passed the law saw a nearly 50% improvement in migrants with licenses that include examination and training requirements.
Michigan wouldn’t be the only state to start recognizing licenses from other states. In fact, the trend toward occupational licensing reform is growing. In the past decade, 20 states in the country have enacted legislation, with the vast majority passing laws in the last five years.
When Gov. Rick Snyder began the Going PRO program, he said that it would help fill needs in the skilled trades and especially in maintenance, manufacturing, construction and health industries. Licensing recognition would help this, too. The states with universal licensing are adding more jobs in these industries than Michigan is.
Recognizing more licenses sooner rather than later would let Michigan tap into a larger labor market. When few states have license recognition, licensed workers have limited options if they’re looking for better opportunities. This gives the states with license recognition an advantage in attracting workers. When most states have licensing recognition, it becomes a liability to the states without them since they are closed off to workers who have options elsewhere.
Michigan lawmakers have dabbled with license recognition in the past. Gov. Whitmer loosened licensure requirements to allow out of state health care professionals to work in the state during the pandemic.
Some people may be worried that recognizing licenses issued in other states will lead to lower standards for professionals in Michigan. Other states may have looser standards, after all. But experience on the job is much more important to work quality than the hurdles to obtain a license. We should let experienced people work. And if a person has a bad record in other states, the state can prevent recognition when there is a mark on a potential employee’s record. This is far more appropriate than making a qualified worker go through a year’s worth of required education and experience — the average a state’s license takes in this country.
Labor markets are tight everywhere in the country right now, with employers complaining about the difficulty of finding qualified candidates. The state would do better if it opened its labor markets to people from across the country.
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Christopher Labella is a Morey Fiscal Policy Initiative intern at the Mackinac Center for Public Policy. James M. Hohman is the director of fiscal policy at the Mackinac Center for Public Policy.
