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Illinois licensing reform has improved employment, reduced crime

Liam Sigaud

With the start of the new year, some Illinois families are having to stretch further than before, but reducing barriers to working could help make the difference. A new study on a recent policy reform found that, when Illinois made it easier for people to enter licensed industries, households had more income while unemployment fell — and so did crime.

Occupational licensing covers more U.S. workers than unions or the minimum wage, and about one in four workers in Illinois. Although requirements vary by state, most states also still prevent applicants with criminal records from obtaining an occupational license. Some states allow licensing boards to consider arrest records that did not lead to a conviction and use vague “good moral character” requirements, giving boards wide discretion in deciding who gets a second chance. Many states, including Illinois, also do not impose time limits for considering criminal records.

This creates a story out of the Upside Down, where qualified applicants who want to contribute to society have completed all the requirements, can still be denied a license — even for occupations with serious labor shortages like support roles in health care.

In 2017, lawmakers in Illinois reformed its criminal record restrictions for occupational licensing, leading the way among its neighbors with Public Act 100-0286. The law reformed the Civil Administrative Code for the Department of Financial and Professional Regulations and went into effect at the start of the new year. Licensing boards could no longer deny a license based on an arrest record that did not lead to a conviction or use good moral character requirements. The law also prohibited boards from using a criminal conviction to deny an application if the offense did not relate directly to the occupation in question, creating a standard that balanced public safety with workforce access.

Measuring the effects of these reforms is important for lawmakers and the public to understand. The Knee Regulatory Research Center’s Darwyyn Deyo and Alicia Plemmons studied the effects of Illinois’ reforms on employment and public safety, finding that the 2017 law significantly improved outcomes for Illinoisans. After the reform, licensed industries in Illinois had more employment growth than unlicensed industries, indicating more people were able to work in important occupations such as construction, finance and real estate. As employment increased, so did household income and earnings.

To be sure, protecting the public is important, and some may be concerned about letting people with criminal records work in licensed occupations. To that end, the study also looked at whether Illinois’ new approach affected public safety. Previous research found that states with more occupational licensing also have higher recidivism rates, as people trying to re-enter the labor force are barred from working. On the other hand, when people can access well-paying jobs, they are less likely to reoffend. After the 2017 reform made it easier for qualified applicants to work in licensed occupations, property crime fell — and it fell most in Cook County.

Increasing household income can help keep families together, generating positive ripple effects through communities.

Although Illinois has reformed some of its licensing laws, it still requires licenses for dozens of low-income occupations, even for rarely licensed occupations like natural hair braider teachers. There are over 1,000 different occupations regulated in at least one state, including doctors and lawyers but also contractors, hairstylists and barbers, tattoo artists, makeup artists, pest control technicians, and bus drivers. Meeting licensing requirements entails months or years of education and training even for low to middle-income jobs, along with paying hundreds of dollars in nonrefundable licensing fees, meeting citizenship and English language requirements, and more. Meanwhile, licensing requirements are often not tied to specific outcomes and other options to protect the public like certification and public reviews can ensure high market quality.

Many Americans view our criminal justice system as unfair and ineffective. Recent polling has found strong support among voters for overhauling practices that contribute to rates of imprisonment that are far out of step with those of other countries. But even once people go home, they often face continuing punishment with collateral consequences. Illinois has reformed its laws, but still has no time limit on how long licensing boards can consider criminal records and has no petition process in place for applicants who are denied a license. Another recent study found that by reforming its occupational licensing laws, Illinois could promote more equitable opportunities, especially for low-income and vulnerable communities.

Even though it led the way, Indiana and Iowa have now outpaced Illinois in its reforms. Collateral consequences for criminal records are often far-reaching and can limit people’s access to housing, education, voting, and other opportunities. They can reverberate long after a fine has been paid or a sentence has been served by barring access to large sectors of the labor market.

As we ring in the new year, updated reforms could further improve economic opportunities for the people of Illinois, while also making communities safer.

Darwyyn Deyo is an associate professor of economics at San Jose State University and director of regulatory frontiers at the Knee Regulatory Research Center at West Virginia University, where Liam Sigaud is a research analyst.

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