[inaudible conversations] welcome back. This is a panel on how government policy drives up the prices for the poor and this panel is how Government Policies limit opportunities for. In a lot of ways poor are getting a double hit. They have to pay higher prices which affect them disproportionately than higher earners and so they would just like if they had more opportunity to make money to pay those prices it would be better however, the Government Policies will talk about in this panel limit the opportunities for them to get a job or for anyone to get a job but the most in need people are the ones who need it the most. We are running behind time several cut straight to the introductions. Lisa is the director of Strategic Research at the institute of justice she helps manage the institute Strategic Research initiative which great policy and social research on central to the mission. Poor working as a director of Strategic Research she served as the Institute Director of vacations and she joined the interview in 2001 from the hill and is now a global vacations from where she specializes in Public Relations for technology companies. After lisa will hear from diane who is a Senior Research fellow in regulatory policy at the Heritage Foundation. She joined heritage and studied in august 2010 and she previously was director of risk environment and Energy Policy for two years at the fraser institute. Finally, we have jason policy analyst at the Heritage Foundation for legal and judicial studies at the Heritage Foundation. He has written extensively on the need to reform the nation civil active forfeiture laws and researches and writes on issues such as regulation of Unmanned Aircraft systems, economic liberties and the sharing economy and criminal justice form and policing. He holds a masters degree in Public Policy from george mason university, Government International affairs, graduated soon make him latte from Bowling GreenState University with a bachelors degree in history and political science. With that we will go to lisa. More American Workers than ever need a permission slip from the government before they can do their job but permission slips, of course, is an occupational license. To get one you have to meet certain criteria established by the government. You may be required to attend school for four years or Cosmetology School or college for four years or cosmetology for 1600 hours. You may be required to apprentice in your chosen occupation for two, three or even four years. You may have to pass an exam or two. Nearly always youll have to pay fees. The share of the American Workforce subject to such licensing redtape has been on the rise since the 1950s. Back then just one in the americans needed a license to work. Today that figure is closer to one in four. As terry pointed out this morning these policies hurt the poor in two key ways first, the focus of this panel is that occupational licensing redtape creates a real and substantial roadblocks to Economic Opportunity. Back in 2000, the institute for justice released a study called licensed to work. We examined the requirements to get an occupational license for 100 to low and middle income occupations across all the states and the district of columbia. We found that on average breaking into those 100 and to lower income occupations would take nine months in education and training, passing one exam, and paying more than 200 in fees. Those figures dont account for hidden costs like income for gone while in training or the cost of tuition for required schooling. Thats an awful lot of time and money spent trying to earn a license instead of learnin earna living. Those cost, of course, will be particularly hard for folks in the lower income to bear. The Economic Cost can be real and substantial. By one estimate licensing laws are costing the American Economy as many as 2. 85 million jobs. The other cost to the poor, of course, is from higher prices. Licensing laws, artificially restrict the supply of providers allowing them to raise their prices. One estimate puts that figure, the cost to all of us from higher prices, at about 203 billion annually. For many poorer americans that means paying more for the same services or sibling doing without. That is the 30000foot view of occupational licensing from the perspective of an economist. Today what i want to talk about is what occupational licensing laws look like to ordinary americans. Americans like that on she is a single mom and an african style hair breeder she learned the craft of braiding from her mom growing up. That is how the track craft is passed down from generation to generation. It originated thousands of years ago in africa and is a natural hair care. Involved no heat or chemicals and no sharp instruments. Nonetheless, she, a skilled writer, her youth was required in the state of iowa to get a cosmetology license to practice legally. That would have meant attending Cosmetology School for 2100 hours for more than a year at a cost of about 22000 in tuition. Then passing a cosmetology examined paying the fees. That exam, by the way, wouldnt test anything about african style hair testing nor would the vast curriculum teach anything about african style hair braiding. She got lucky and that she found a licensed salon owner that was willing to employ her but she was operating in a kind of legal gray area. At any time the state board of cosmetology couldnt shut her down and that would have meant not just the loss of her job in the loss of her income but she would have risked a year in jail and up to 10000 in fines. Also for the crime for braiding hair without a license. She joined with the institute for justice and we sued the state of iowa and last year they back down. They exempted african style hair readers from the states cosmetology licensing scheme. Now, breeders have to register with the state and they are in. They are free to practice. These have been increasingly processor in the state and in recent years about ten states have adopted some kind of reform exempting raters from cosmetology laws. The effects can be quite essential. Mississippi adopted a Registration System back in 2005 and in the most recent year we have data for there was 2600 registered raters in mississippi. That is the effects were one occupation in one state. Unfortunately, others have not yet been so lucky. Like. [inaudible] she is an eyebrow spreader in louisiana and is the owner of the threading studio and spot in the new orleans area. Her craft is eyebrow threading and this is another form of natural grooming and it originates in south asia and the middle east. It simply involves taking a piece of cotton thread and skillfully manipulating it over the face to pick out unwanted facial hair. Its pretty impressive when you see it and a lot of people learn the craft in her native india. She moved here and opened her own business and business was booming. Threading is becoming increasingly popular in the states because its cheaper and quicker alternative to other forms of hair removal. Her business was taking off until the state of louisiana in the cosmetology board determined that predators should be licensed as an aesthetician. This is another cosmetology license. This would take 750 hours in Cosmetology Schooling at a cost of about 10000 in tuition and passing not one but three exams. Again, none of those exams test eyebrow threading and practically none of the curriculum addresses it at all. This is the position that she is and as a Small Business owner. She has customers demanding Threading Services but she cant hire the people that is qualified to provide them. License and aestheticians dont know how to read. They dont learn it in Cosmetology School. The people who do know how to perform the craft typically cant afford to go get in and aestheticians license. She use to employ unlicensed predators until they started cracking down. The board of cosmetology sent her a cease and desist letters and they upped the ante and signing her thousands of dollars and finally they ordered her to fire her unlicensed predators. Fearing a complete loss of her business and that is what she had to do. Those folks are either out of work or working in less lucrative and desirable feels like retail because they have to find some way to make ends meet. That is what occupational licensing laws look like to too Many Americans and especially lower income americans. So, what can we do about it was work im guessing that most of you in this room are familiar with praise repeal and replace . I will suggest that in the licensing context we should be repealing and sometimes replacing. There are a lot of licensing laws we could do without. We dont need the government interfering in the private marketplace for raters or for predators. Consumers are perfectly wellequipped to decide who is qualified for those services and the discipline of the private marketplace will ensure Higher Quality. If there is a demonstrated need for some form of Government Intervention we should be actively considering lighter touch alternatives to creating barriers to work. For example, if there is a concern that sanitation practices that certain sanitation practices be followed how t have a regular regime of inspection rather than licensing. We regularly inspect restaurants but we dont license chefs or the waitstaff. If there is a concern that consumers are sophisticated enough to understand whether a Service Provider is qualified or not, private certification or less desirable government certification can fill that role. Providers can go and become certified demonstrate that they have met certain qualifications in signal that to consumers but others who havent met those politicians arent necessarily left out of the market. By cutting back the red tape and by peering back to the growing tangle of occupational licensing laws we can put more americans to work and in particular, lower income americans. [applause] now we will hear from diane. Thank you. Good morning everyone. Im here to talk about the effects on the floor of the permit efforts to eliminate what are called payday loans under the dodd frank supposedly Consumer Protection act. Dodd frank represents itself a massive regulatory takeover of the entire Financial System and i could spend days describing what the domino effect of all of those relations are in Financial Services across all income levels and sectors of the economy but i will stick primarily to the payday lending element. In some respects, though, the excessive regulations are the same no matter what ones financial status is. Your choices, less competition, and higher prices. For the poor, generally speaking, there are fewer alternative sources of credit and capital which makes the crackdown on payday lending particularly egregious. For those who may not be familiar with payday loans they are shortterm loans typically less than 500 and they come due on a borrowers payday. They are often structured to be paid off in a single lump sum but theres also the option of a rollover. The loans are primarily situational which means they are solving a specific problem, car repair, medical bill, utility bill and something that the borrowers need to take care of immediately and thats an important point because if you are poor and you have an unexpected breakdown in your transportation to get your job and if you dont have a source of quick cash you could easily lose your job and if youre unable to get to your work. Indeed, more than 12 Million People use Payday Loan Services every year and banks simply do not offer such small loans. This is a market niche that is not really filled by any other financial Service Provider. Critics claim that these loans trap our orders into a highcost debt cycle by charging a high annual Percentage Rate but this is ignorance. Plain and simple. Shortterm loans do not extend over a years worth of time and there is an annual rate to them and the interest is not compounded which makes all the difference in the world. The apr represent the actual rate someone pays over a course of the year due to compoundin compounding the process whereby interest is added to unpaid principal. However, payday loan customers do not borrow, as i said, for a full year and the interest charges to that compound. There is usually no apr on for example, if i borrow 100 for two weeks for a fee of 15 then the fee expressed as an Interest Rate would be 15 . Now, when a payday loan customer roles over a loan he has to pay a new 15 fee and is responsible for repaying it for a total of 120. Interest cost cannot explode exponentially as they can with a mortgage because there is no compounding but the cfp d, the Consumer FinancialProtection Bureau is the primary regulator in this case. The cfp b says borrowers are incapable of making rational choices and subject themselves to expectation because they arent smart enough to manage their finances and theres a whole tangent on what that view of the poor can do for their opportunity and prospects and i wont go down that entire road but its something to keep in mind. The view is repugnant on so many levels and clearly the critic failed to grasp that payday loans are a remedy. They are not the problem. They are going to payday lenders because they have a problem in the remedy is in the loan. Along comes the Consumer FinancialProtection Bureau with the proposed rule that would effectively put 70 of payday lenders out of business. Most notable would be the new requirement that lenders before making their shortterm loan would have to determine the customers ability to pay that is to make the loan payments and meet their other financial obligations and basic Living Expenses without needing to be borrow. The same construct has also been applied to mortgage lending under dodd frank and the result is that housing sales are down and the effect of the impact that its much harder for firsttime buyers, younger buyers in the market, to purchase a first home. If you dont have that first home buying population it doesnt create turn in the market and that turn is that current combiners can sell their home to someone in by up and that over time and through the cycle we get ever increasing members of homes being bought and sold. In terms of the payday loans specifically a lender would have to verify the consumers net income, verify their debt obligation using a Consumer Report or a registered Information System and verify the consumers housing costs, forecast a reasonable amount of basic Living Expenses for the consumer, determined the consumers ability to pay the loan based on the Lenders Protection of the consumers income debt obligation, housing costs and the forecast of basic Living Expenses. All of which sounds ridiculous. Not even bankers do that when they are laying out mortgages to that degree. Of course, they want to know but they dont have to swallow that they have to do it more than dodd frank but previous two dodd frank they didnt have to do that. Under the ability of pay regime they are shifting accountability from loans from borrowers to lenders in indeed, if youre a borrower and you cant pay back your loan you can sue the lender under this rule as well as under the mortgage for miscalculating your ability to repay. This is also a defense of defaulting on a mortgage. This is a perversion of credit principles. It proves that consumers even assuming the most benevolent intentions this paternalism fosters dependence on government and the roads Economic Freedom and that always hit the lowest rung of the economic ladder, of course. Its not hard to predict the results of regulatory regimes and the cost of making the loan would swamp the profit and therefore payday loans would become a rare and cost it would cut off a very important source of cash for unbaked, as they are called, consumers. It also reflects a political narrative about which predatory lenders exploit financially illiterate consumers and it also then send the poor or those who have few Financial Resources into getting cash and credit from blackmarket or unregulated sources of funds. Isnt a lack of Consumer Protection in a small dollar lending. More than 30 states already regulate payday loans but in typical washington passion all of that doesnt seem to count because its not ironically, dodd frank is a general in the Consumer FinancialProtection Bureau in particular are imposing so many costly rules that so many small Financial Services are being driven out of business in this, interns,