Is Virginia really business-friendly, or is it all words, rules and regulations?

By Carten Cordell |Watchdog.org Virginia Bureau

ALEXANDRIA — African hair braiders and mold inspectors are free to practice their vocations in Virginia, but for countless other professions, the art of the deal is like a briar patch of regulation.

The wheels of progress are moving slowly, however.

“I think (Virginia) has made some very small progress in that direction,” said Emily Washington, associate director of state outreach at George Mason University’s Mercatus Center in Fairfax. “(Deregulation) is the right thing to do, because it will benefit consumers through increased competition in those industries and will take a step forward toward giving people the right to earn a living.”

For now, barbers, interior designers, mixed-martial artists and myriad other professions will have to keep paying the government for the right to hang an “Open for Business” sign in Virginia.

Policy analysts say occupational licenses need even more deregulation, though new legislation has yet to be prefiled for the 2013 General Assembly.

Occupational licenses set up “significant hurdles for people to clear just to enter the occupation of their choice,” said Dick Carpenter, director of strategic research at the Institute for Justice, a libertarian civil liberties law firm based in Arlington.

“It is one of those rare policies that actually accomplishes what it intends to accomplish. It keeps people out of an occupation unless they have completed a certain amount of educational experience, paid fees and other requirements,” Carpenter said.

Gov. Bob McDonnell’s Commission on Government Reform & Restructuring advocated deregulating or consolidating several boards that oversee more than 30 industry groups in the state.

In a November 2011 report, the commission offered 12 suggestions for either eliminating governing boards by combining them with other boards or completely deregulating certain professions from requiring a license.

Of those suggestions, only two — deregulating African hair braiders and mold inspectors —  were signed into law this spring. Other proposals sought to provide more continuity with different states’ laws for nurses and licensed spouses of military service members, as well as count military training toward licensing requirements.

Virginia collected $4.4 million in licenses and permits in fiscal 2011 and is projected to take in $8.6 million in the 2012-2014 biennium.

“They have done more (for reform) than many states,” Carpenter said. “At least they are starting to examine what occupational licenses can be eliminated. It’s not a big step, obviously, but at least it is a beginning.”

Though Virginia touts a 5.9 percent unemployment rate, several counties are suffering double-digit joblessness, and licensing analysts say relaxing or deregulating those laws could provide more opportunity

“There are very clear employment effects,” said Morris Kleiner, chair of the Humphrey School of Public Affairs at the University of Minnesota. “Licensing reduces employment growth. Some comparisons I have made across states suggests that it reduces it as much as 20 percent.”

Kleiner said that when he looked at states that regulated certain professions up against states that don’t, the states without licensing experienced 20 percent more growth in the same profession, leading to more employment.

Carten Cordell can be reached at carten@olddominionwatchdog.org