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Opinion | Licensing away economic prosperity

Allen Mendenhall

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By Allen Mendenhall
Executive Director of the Blackstone & Burke Center for Law & Liberty

Do you want to alleviate poverty in Alabama? Do you want to curb the power of special interest groups over government agencies? Do you want more affordable goods and services in basic industries?  Do you want to help disadvantaged groups find good jobs and become productive citizens? Do you want to reduce the population of our overcrowded prisons?

If you answered yes to any of these questions, you should read a new report published by the Alabama Policy Institute titled “The Costs of Occupational Licensing in Alabama.” Coauthored by Daniel Smith (Troy University), Courtney Michaluk (Troy University), David Hall (Troy University), and Alex Kanode (George Mason University), the report details the effects of occupational licensure on our state.

What is occupational licensure? In short, it’s governmental regulation requiring people to obtain a license before entering into certain trades or fields. Sounds harmless, right? Aren’t these regulations in place to protect consumers from exploitation and inexpert practices? Such reasoning led to the rise in occupational licensure, which today extends to several zones of economic activity.

However well-meaning, occupational licensure has had unintended consequences on the people it’s designed to protect. Instead of helping average consumers, it lines the pockets of industries that have lobbied to regulate away entrepreneurial forces that drive down costs.

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If you’re poor and trying to find low-skilled work as a barber, manicurist, eyebrow threader, hair stylist, school bus driver, or shampoo assistant, you must obtain a license first. This license may be prohibitively expensive because of renewal fees, coursework, continuing education, and so forth.

“Alabama licenses a total of 151 occupations,” according to the report, “covering over 432,000 Alabama workers, which represents over 21 percent of the labor force.” Think about that: more than two of every 10 people working in Alabama need a license to do what they do for a living. Licensing boards governing admission standards and prerequisites can mandate expensive training and dues that don’t affect the quality of industry services.

Economists refer to occupational licensure as a barrier to entry. Barriers to entry ensure that those already within a profession or trade can raise prices to artificially high levels, in effect squeezing out competition by using the mechanisms of government to control the market.

Inflated prices harm low-income families who cannot afford to buy what they could have bought if the market had set prices based on natural supply and demand. Spouses of military service members often suffer from occupational licensure because, when they move from state to state, they must jump through hoops to enter the licensed profession in which they practiced in other jurisdictions.

Occupational licensure is, in short, a net burden on the economy, escalating prices, limiting consumer choice, and restricting economic mobility.  The API report estimates that the overall costs of occupational licensure in Alabama exceed $122 million. That’s a lot of money. What can be done to keep some of it in the hands of the ordinary people who need it most?

The report proposes five reforms for Alabama policymakers:

  1. “[T]hey can reform current procedures for extending occupational licensing to new occupations and mandate thorough review processes to ensure that licensing is not extended to new occupations without a demonstrable and severe threat to consumer safety that cannot be overcome with the market mechanisms, such as consumer or expert reviews, reputation, guarantees, or private certification, or the already existing government laws, such as those dealing with liability, fraud, misrepresentation, and false advertising.”
  2. “[T]hey can establish procedures to systematically review all licensure requirements for currently licensed occupations to ensure that they do not require unnecessary or excessive requirements or costs for licensure.
  3. “[T]hey can systematically review all currently licensed occupations to determine, individually, whether a demonstrable severe threat to consumer safety exists. If not, they can remove occupation licensing entirely for those occupations.”
  4. “[They] can explore licensure reforms that specifically target ex-offenders” to reduce the prison population and criminal recidivism.
  5. “[They] can … explore occupational licensing reform with military members and their families in mind.”

A short article cannot capture the nuance and particulars of the entire report; readers should view the report for themselves to make up their own minds.

During this time of partisan divide and political rancor, people of good faith on both the left and the right can agree that something needs to be done about occupational licensure. The problem cannot continue to grow. It presents a unique opportunity for Republican and Democratic lawmakers to come together to ease economic burdens on the people of Alabama. Let’s hope they seize it.

Allen Mendenhall is associate dean at Faulkner University Thomas Goode Jones School of Law and executive director of the Blackstone & Burke Center for Law & Liberty. Visit his website at AllenMendenhall.com.

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Guest Columnists

Opinion | Our HBCUs are at risk – we need to step up to protect them

Sen. Doug Jones

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Since 1867, Historically Black Colleges and Universities, or “HBCUs,” have played a vital role in Alabama’s higher education system. With 14 today, Alabama is home to the most of any state in the country. And as I said in a recent speech on the Senate floor, we don’t just have the most, we have the best.

Tuskegee University is the only HBCU with a College of Veterinary Medicine, and the school produces over 75-percent of African-American veterinarians in the world. It has also just hired its first female university president, Dr. Lily McNair.

Alabama A&M University is the only 1890 land-grant university offering four Ph.D. programs. They are also the leading producer of African-Americans with Ph.Ds. in Physics.

Oakwood University is the nation’s fifth-highest producer of undergraduate African-American applicants to medical school.

Alabama State University is home to the National Center for the Study of Civil Rights and African American Culture. ASU is currently doing preservation work on some never-before-seen documents such as court notions, bond documents, and official papers connected to the Montgomery bus boycott.

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And Lawson State Community College was named a Champion of Change in 2011 by then-President Barack Obama.

Today, there are over 100 accredited HBCUs, both public and private, in 19 states, the District of Columbia, and the U.S. Virgin Islands. They enroll approximately 300,000 students – 80-percent of whom are African-American and 70-percent are from low-income families. While HBCUs only make up three-percent of our country’s colleges and universities today, they produce nearly 20-percent of all African-American graduates.

Among HBCU graduates, there are countless trailblazing Americans who have quite literally changed the course of our history as a nation: Dr. Martin Luther King, Jr., Thurgood Marshall, Marian Wright Edelman, Langston Hughes, Katherine Johnson.

And according to the National Science Foundation, between 2002 to 2011, the top eight institutions where African-American Ph.Ds. in science and engineering earned their bachelor’s degree were all HBCUs. HBCUs annually generate $14.8 billion in economic impact and add more than 134,000 jobs for local and regional economies. Based on a report in 2014, Alabama HBCU graduates can expect total earnings of $130 billion in their lifetimes. I could go on and on.

For all of these incredible achievements, HBCUs in Alabama and across the country are working against the strong headwinds of serious financial struggles.

The Government Accountability Office recently investigated the capital finance needs of HBCUs. Its report estimates that 46-percent of all HBCU buildings are in need of repair or replacement. This is due to deferred maintenance, the evolution of higher education and technology, and the fact that many of these buildings are state or federal registered historic places. For example, Tuskegee University is designated as a National Historic Site by Congress.

That is a remarkable figure – and it is wholly unacceptable.

But this is not a surprise for those who understand the challenges these institutions have long faced. HBCUs lack a plethora of revenue sources – public HBCUs heavily rely on state and federal grants, appropriations, and bonds. Private HBCUs have to rely on private or alumni giving and tuition fees. On top of that, the GAO found that the average endowment of an HBCU is half the size of a similarly sized non-HBCU.

None of the 90 institutions of higher education in the country with endowments greater than $1 billion is an HBCU.

This results in an endless cycle for these schools that have contributed so greatly to our country and the talented students they serve. With their limited revenue sources and the discrimination they face in the bond market, it is difficult to maintain campus buildings that attract high enrollment. Lower enrollment just leads to even less tuition and fees collected. And the cycle continues.

But I don’t just want to talk about problems without offering a solution.

Recently, I introduced the Strengthening Minority-Serving Institutions Act that will permanently extend and increase federal funds to all minority-serving institutions. Most federal funds are currently set to expire after Fiscal Year 2019.

My bill goes beyond just supporting our HBCUs, but is inclusive of other minority-serving schools like those that primarily admit Asian Americans, Pacific Islanders, Alaska Natives and Native Hawaiians, Native Americans, and Hispanic Americans, among others.

With this legislation, we increase mandatory funding from $255 million to $300 million for these institutions.

They will be able to put that money to good use for infrastructure improvements, technology upgrades, and other critical needs that have gone unfulfilled.

This won’t solve all of the challenges HBCUs are working hard to overcome, but it’s a step in the right direction—and it’s the right thing to do for these schools that are part of the very foundation of our higher education system.

 

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Guest Columnists

Opinion | Water infrastructure vital to Alabama’s economy

Bradley Byrne

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There are very few places in the United States that can boast the sort of diverse infrastructure we have here in Alabama. There are 11 interstates, over 3,000 miles of freight rail, 5 commercial airports, and more than 132,000 miles of rivers and stream channels in our state.

One of our state’s most important pieces of infrastructure is the Port of Mobile, the 10th largest port and fastest growing container terminal in the United States. With 41 berths, 5 million square feet of warehouses and yards, and covering 4,000 total acres, it has an economic impact of around 135,000 jobs in Southwest Alabama and generates more than $22 billion per year in economic value.

Recent expansions and developments at the Port will only further grow the economic impact of the Port on not only Southwest Alabama but our entire state. For example, the recent announcement about a new roll-on/roll-off vehicle processing facility at the Port will help our state’s automotive manufacturing industry continue to grow.

Even with these impressive facts, it has been clear that our infrastructure throughout the country is in need of updates, repairs, and overhauls to ensure that we are at the cutting edge of transportation and innovation in order to compete economically on the world stage.

Last week, in a major bipartisan effort, Congress sent a piece of legislation to President Trump’s desk that will help to unlock the full economic potential of our region and state.

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America’s Water Infrastructure Act of 2018 passed the Senate last week, after passing out of the House a few weeks back. This bill authorizes funding for waterway projects, port improvement projects, and other important water infrastructure projects in all 50 states. Not only will this allow for much-needed infrastructure improvements, but the bill reinstates a “Buy America” provision for federally funded projects, meaning a boost for American steel producers.

Commonsense legislation like this will create jobs, incentivize the use of American-made products, and build our nation’s capabilities to produce, package, and transport goods all around the globe. It will also make our drinking water safer, improve our wastewater systems, combat algae blooms, and restore our nation’s beaches through grant programs.

The Army Corps of Engineers can move forward on improving our dams, locks, reservoirs, and shipping channels. We have a major Army Corps project that needs attention right here in Southwest Alabama. The project to deepen and widen the Mobile Bay Ship Channel has the ability to fundamentally alter the economic potential of the Port and create more jobs in our state. Senator Richard Shelby has long been a champion for this project, and I am committed to working with him to make it a reality.

Our shipyards, airports, and rail yards will all see an impact from waterway projects like this, and I am thankful to the members of the Senate and my colleagues in the House for passing this water infrastructure legislation to help propel Alabama even further into the 21st Century.

The future of Alabama rests upon our ability to look beyond the short term and into what will set us up for success for years to come. Focusing locally on important infrastructure projects will spur economic growth through business investment and job creation, and it will open up opportunities we don’t even know exist yet.

Investing in our infrastructure today will lead to a stronger tomorrow. I applaud the work of my colleagues in both the House and the Senate in making a better economic future possible through this vital water infrastructure legislation.

 

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Guest Columnists

Opinion | Retiring Republican state senator: Alabama should expand Medicaid

Gerald Dial

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I was born in Delta, Alabama, and I have spent the majority of my life in Lineville, working as a teacher, a coach, and as a state senator in the Alabama Legislature. I served my country in the Alabama National Guard as a Brigadier General and have a strong sense of duty for the state of Alabama. I know the joys and the challenges of life in rural Alabama, and I am committed to keeping our rural areas strong.

As a retiring legislator and a former chairman of the State Senate Health Committee, I can appreciate the struggles our lawmakers face in trying to fund key state services. However, I also understand the importance of quality health care in our local communities, and I believe that by not expanding Medicaid we are missing a huge opportunity to strengthen our local economies.

For years, we have used state dollars to recruit industries to locate in Alabama, and we have been very successful. We now have an opportunity to support existing health care jobs and make sure every Alabamian has access to care when they need it, and where they need it. Investing in Medicaid expansion will keep our rural hospitals open, save hundreds of local jobs, and provide basic insurance coverage to almost 300,000 Alabamians. These are our friends and neighbors, hardworking Alabamians who don’t earn enough to afford health insurance. They work in our local restaurants, in our local retail shops and build our houses. Medicaid expansion would enable them to continue working while keeping their family healthy.

What happens if Alabama passes up this opportunity? More hospitals will close. Already, six rural hospitals have closed since 2011, and 88 percent of the remaining rural facilities continue to operate but are losing money every day, providing care to thousands of un-insured individuals. Many have had to eliminate services, cut staff and, if nothing changes, a number of them will likely have to close their doors. And when a community loses its hospital, it also loses doctors, pharmacies, and other providers, devastating the community not only in terms of access to health care, but in job and economic losses.

I realize we don’t have all the answers on how Medicaid expansion will be funded. But I do know that for every $1 the state invests, the federal government will return $10 to the state. That’s a good deal for Alabama and one that we can’t afford to pass up. And remember, that federal funding comes from tax dollars we are already sending to Washington, dollars currently funding expanded Medicaid programs in 33 other states and in Washington, D.C. Instead of sending our money out of state, let’s invest that money in Alabama’s health care industry.

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We’ve got to find a way to keep our state’s health care system viable. I urge all Alabamians to find out more about Medicaid expansion and the tremendous benefit it will have, particularly in our rural areas. I’m afraid that the cost of doing nothing is too great.

Gerald Dial represents District 13 in the Alabama State Senate, which includes all or parts of Randolph, Lee, Cleburne, Clay, Cherokee, and Chambers counties.

 

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Opinion | Voters beware: Amendment 1 is a wolf in sheep’s clothing

Randall Marshall

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Alabama is in the midst of what many have characterized as an opioid crisis. Our health care system was recently ranked 46th among all states. Our education system is even worse – 47th in the nation. Only South Carolina, Louisiana, and New Mexico are ranked lower. These are big, important issues, and redressing them should be at the forefront of our legislators’ agendas. Instead, our lawmakers are frittering away their time, resources, and influence to persuade voters to pass a constitutional amendment (Amendment 1) that somehow manages to be both useless and reckless at the same time.

Amendment 1 purports to allow public bodies, including public schools, to display the Ten Commandments on government property. But, there’s a huge catch that legislators are hoping voters won’t notice: a Ten Commandments display will only be allowed so long as it “complies with constitutional requirements.” In other words, the proposed amendment would create no new rights. Even if Amendment 1 passes, the government will still be prohibited from displaying the Ten Commandments if it would violate the U.S. Constitution. Although legislators have hidden this key language from voters by omitting it from the ballot, it will be included in Amendment 1.

If Amendment 1 would change nothing, what’s the harm in voting for it? The answer lies in another effort to hide the ball from voters. Voters won’t see this language on the ballot either, but Amendment 1 also requires that any display of the Ten Commandments be “intermingled with historical or educational items, or both, in a larger display within or on property owned or administrated by a public school or public body.” The Amendment suggests that this will be sufficient to meet “constitutional requirements.” Not so.

While the federal courts have upheld some older displays of the Ten Commandments in very specific circumstances, they also have viewed newer displays as constitutionally suspect. Courts often see these newer displays for what they are – an intentional effort to promote the religious doctrine of certain faiths and send a divisive message that those who don’t share these religious beliefs are second-class citizens. Indeed, although Amendment 1 specifically urges public schools to put up the Ten Commandments, no federal court has upheld their display in the school setting, regardless of the display’s nature or broader context.

In short, whenever the government puts up the Ten Commandments, it raises serious constitutional concerns. Amendment 1, if passed, will encourage public bodies to erect constitutionally questionable religious displays featuring the Ten Commandments and give officials false comfort that they will be safe from costly litigation as a result. They will not be. Although Amendment 1 promises that no public funds will be used to defend the constitutionality of the Amendment itself, local public bodies, such as school districts, will be forced to hire lawyers to defend lawsuits challenging specific Ten Commandments displays. And, should the plaintiffs prevail, the local public body and its taxpayers will be on the hook for the plaintiff’s attorneys’ fees, which could run easily into hundreds of thousands of dollars.

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Religious expression should come from people’s hearts and faith – not stone monuments and wooden plaques erected on government property. Nevertheless, Alabama’s legislators will surely tout Amendment 1 when they go home to their districts, deflecting from the fact that they’re ignoring our real problems. While it might make a nice talking point for lawmakers, Amendment 1 is a wolf in sheep’s clothing for everyone else. Voters should reject this ill-conceived proposal and send a message to their representatives that this hollow gesture is not what Alabama needs. What we need is for our representatives to get to work on the real issues affecting Alabamians.

 

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Opinion | Licensing away economic prosperity

by Allen Mendenhall Read Time: 4 min
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