Coats: Remove barriers to work

Most people, and I mean almost everyone, would rather work than receive welfare. Earning your own living is an essential element of happiness and self esteem. These are the well-documented conclusions of Phil Harvey and Lisa Conyers in their new book, “The Human Cost of Welfare.” You can watch their discussion of their book at Cato last month here.

Dozens of welfare programs attempt to help the poor and disadvantaged with mixed results. We would do well to replace most of these programs with a guaranteed minimum income (from which the government should deduct funds dedicated to health insurance and old age pensions of the recipients choice) as I proposed several years ago as part of a major tax reform.

Some of these programs discourage work by imposing financial costs for working as the result of reduced income from lost benefits. These welfare design flaws should be fixed (as the proposed guaranteed minimum income would), but governments have also thrown up many other barriers to getting jobs in the form of regulatory requirements and restrictions. Unnecessary or overly burdensome licensing requirements for many jobs protect incumbents and discourage job seekers.

According to the Washington Post: “Last year, a White House report documented the startling fact that 1 in 4 U.S. workers need a license to do their jobs, a fivefold increase since the 1950s.”

One of thousands of examples is the “license to blow” in Maryland. The state of Maryland has just bravely reduced the amount of training required for a license to wash and dry hair from 1,200 hours to 350 hours. “The new Maryland bill creates a “limited” cosmetology license for workers in blowout salons; it can be obtained after 350 hours of training. Previously, you had to be licensed as a stylist or cosmetologist, which require 1,200 and 1,500 hours of training, respectively,” according to the Post.

Most people want to work and we should make it easier for them to do so.

Warren Coats, a former director of the Cayman Islands Monetary Authority, and former senior monetary policy adviser to the Central Bank of Afghanistan, Iraq and Kenya for the International Monetary Fund, is on the Editorial Board of Cayman Financial Review.