Excess of occupational licenses affects the economy

They claim that having 129 trades that require it works against Puerto Rico's development indicators.

Juan Villeta (right), president of the Puerto Rican Association of Financial Analysts and Jorge Rodríguez, founder of the Puerto Rico Institute for Economic Liberty (VANESSA SERRA DIAZ).

In Puerto Rico, there are 129 trades and jobs that cannot be legally practiced unless the person obtains a license from the state.

Engineer Jorge Rodríguez, founder of the Puerto Rico Institute for Economic Liberty, pointed to this catalog of compulsory licenses as one of the factors for the island's poor performance in economic development indicators. Rodríguez, who is the Chief Executive Officer of the industrial automation engineering firm PACIV, presented his study 'Puerto Rico's Economic Indicators' before the Puerto Rican Association of Financial Analysts. He conducted this analysis with the University of Puerto Rico and is part of a report by the Institute for Justice. Rodríguez will then make public policy proposals based on this research.

He detailed that, of the 129 occupational licenses that are mandatory on the island, there are at least 12 that do not exist in any U.S. state. In addition, he said, there are 26 occupations with compulsory professional organizations (“colegiación”).

This, he said, is then conducive to people with these talents preferring to move to a state where there is no requirement to have formal education or undergo a licensing process to work. "Why does this happen? We know why. It's the professional organizations. If they're licensed, you want the “picket fence”. But who thinks about Doña Juana, about Tony, about Menganito who are trying to get ahead," he said. "How will a person prosper if you put obstacle after obstacle in their way?

Of the licenses they evaluated (about 50), the average number of days of education and preparation is 144 days, plus experience and at least one exam. The average cost of obtaining these licenses is $228.

"A government cannot require a person to be associated with someone in order to work," said Rodriguez, who promotes education on economic liberty issues. "Economic liberty is a constitutional right; that you can work. These professional associations go on the obvious side of freedom of association, because you do have to be free to associate with whomever you want, but they cannot require you to be associated to work."

The engineer also said that he does not advocate the elimination of all licenses. He recalled that these began with the medical profession to monitor the health and safety of citizens. "In the United States, in 1985 there were 5% of the workforce with occupational licenses. Today it is 25%," he detailed, adding that one of the reasons for the creation of these licenses was the lobbying of educational institutions and professional organizations. "The biggest (proponent) they found to create them is that, prior to the license, a guild was always created, an association that does the lobbying. This leads to an interior designers' license that has nothing to do with your well-being.”

"According to information on the Department of State website, the interior decorator license has at least 12 requirements, including a practical exam, a theoretical exam and having a degree. This license costs $50.

The beauty specialist license - which is for life - also costs $50. In addition to certificates such as criminal records and others, it requires certification through eighth grade and a beauty specialist diploma and a 1,000-hour course.

The analyst questioned the arbitrariness of some of these licenses, because while a license for an emergency medical technician requires 400 hours, a license for a manicurist or a tour guide requires thousands of hours.

"They require more hours from an interior designer than from an emergency medical technician. Academics explain to us why and it is because basically associations are created that want to look out for their interests and start lobbying because if I control the supply, I control the prices. Nobody is looking out for the manicurists. But Doña Juana in Juana Díaz, who is good at painting nails, but doesn't have the education, I report her and close her business," he said. "Twenty-six states have already reformed their occupational licenses," he concluded.

This article was originally published in Spanish in El Nuevo Dia.

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