Minnesota experienced a win for liberty recently when the state reformed regulations on in-home food businesses. According to the Institute for Justice, almost every state has regulations, called cottage food laws, that limit the sale of food out of the home. However, until last month Minnesota was one of the strictest states, allowing many bakers to sell their products only at farmers’ markets and events, and capping the amount they could earn annually to $5,000.
Under the new law, bakers can sell directly from their homes and even online to buyers in state. The annual sales cap was also raised to $18,000, a huge relief for many bakers who are reliant on the money they make from their home businesses and have been unable to expand because of the burdensome regulations.
The new law is not perfect. Though it “modif[ies] license exclusions for the direct sale of certain prepared food,” the bill still mandates that individuals register with the commissioner and pay a $50 fee every year unless they make less than $5,000 annually. Individuals must also take a course in handling food (up to eight hours long) every three years.
This is indicative of a mentality that the government ultimately owns its citizens and their property. Well intentioned people who are trying to make a living must pay the government off for permission to do so. However, this was a big step in the right direction for Minnesota, and those who worked on this bill should be congratulated.
Reform of small business regulation and licensure is picking up traction around the country. States including Texas and California have loosened their cottage food laws and seen booms in upstart home businesses. Wyoming enacted the Food Freedom Act this year allowing citizens to sell homemade and homegrown products (with the exception of meat products besides poultry) without a license or a state inspection. Just last week, the White House came out for occupational licensure reform, in an unexpected report by the Department of the Treasury Office of Economic Policy, the Council of Economic Advisers, and the Department of Labor.
[T]he current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines.
Licensure laws claim to protect consumers, but in reality they only protect the large businesses, powerful industries, and monopolistic unions that lobbied for their creation. Twenty-five percent of people now need a license to work, a number which has skyrocketed in recent years from 5 percent in the 1950s. Such requirements have been estimated to cost Americans 2.85 million jobs.
According to the Institute for Justice, which investigated the licensure requirements for 102 low to medium income jobs such as barbers and massage therapists, on average licensure requirements “force aspiring workers to spend nine months in education or training, pass one exam and pay more than $200 in fees.” The report states that one third of the licenses take more than a year to earn.
Progress is being made with reforms like those passed in Minnesota; however, we are also seeing setbacks around the country (such as the recent Second Circuit Court of Appeals decision which upheld a ban on the use of LED lights by non-licensed dentists to whiten teeth), and occupational licensure continues to be a little-known issue. Hopefully, people will notice the positive economic impact of loosened regulations (in the food industry and others), and the White House’s report will encourage bipartisan interest in eliminating barriers to working, starting a small business, and making a living.