By David Flemming
About half of U.S. workers need an occupational license to do their job, a huge increase from the 1 in 20 workers in 1950. 2020 Presidential hopefuls Donald Trump and Joe Biden have denounced this encroachment on labor freedom in the past several months. Yet Vermont legislators aren’t keeping with up with the times.
Our legislators were seeking to add residential contractors to the growing list of low-middle income occupations in Vermont that are license-to-work. The Vermont Senate narrowly passed the contracting bill a few weeks ago, over objections from a bipartisan group of senators.
This seems especially incongruous if we recall that many of our legislators have recently attempted to show high school graduates the value of choosing trade school over four-year college degrees that often give graduates massive debt with little guarantee of getting a job.
In 2017, Vermont had almost 4,800 residential contractors who made an average of $42,000 last year, some of whom made more than $58,000 a year. These are good paying skilled jobs that need younger workers. By imposing a certification process with an added fee, Vermont will in effect be discouraging recent graduates from considering becoming residential contractors. Or perhaps, these graduates might choose to take their talents outside Vermont.
If a contractor receives at least $2,500 to do a job such as putting in a window, he or she must register to continue legally working in Vermont. An individual self-employed worker would pay $75 every two years, while a business would need to pay $250 every two years.
In order to have their license issued or renewed, each contractor is required to have “professional liability insurance,” to cover $1 million of damages. Witnesses testified that buying this insurance would cost around $600 annually for a self-employed individual.
In an earlier version of this post, I had claimed that the bill was truly licensure: putting in place tests from the government that are necessary to do your job legally. In fact, the bill was actually mandating State Certification, the slightly less restrictive government intervention on the Institute for Justice’s “Hierarchy of Alternatives to Licensing.” In other words, the bill’s state certification component would restrict Vermonters from advertising that they are a “certified residential contractor,” unless they pay a fee to have their skills tested. So rather than the worst type of occupational licensing, we have the second most onerous. And just so we’re thorough, we’re also throwing in registration (third most onerous) and mandatory insurance (fourth most onerous). Might it make worse to try mandatory insurance before we go all in with registration and state certification?
Add this all up: A self-employed contractor without insurance would need to spend an additional $650 annually for registration and insurance. They would pay even more if they wanted to take tests for certifications. A larger contractor would cough up more overall, but less per employee.
Contractors would also be told what constitutes a legitimate contract with their customers, down to the line item.
These stipulations may just be the beginning. Rep. Marianne Gamache, R-Swanton, suggested that the contracting bill may just be “laying a base for the building industry” to pass “license rules and regulations that don’t exist now.” Let’s hope we don’t get full on licensure in the coming years.
David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.