Debt, Work, and the State

Abstract

In every state and the District of Columbia, an individual who owes a debt to the state can lose their license to work. Without the ability to make a living, it is much harder to pay off debt. Although using occupational license restrictions as a debt collection tool appears ironic and nonsensical, it has never before been the subject of scholarly debate. This Article begins that important conversation about debt, work, and the state.

This Article identifies and analyzes the pervasive authority that state and local governments have to revoke an individual’s occupational license solely because that person owes a debt to the government. Its first contribution is descriptive—proffering the only existing mapping of state statutes and municipal ordinances that give the government the authority to use occupational licensing restrictions as a debt collection tool. And because this debt collection tool is potent, punitive, and disproportionately affects low-income workers, policymakers must better understand and grapple with its benefits and burdens. Therefore, this Article’s second contribution is conceptual—proposing a new way for how the state should analyze its debt collection actions. It argues that the state must consider more than the cost-benefit analysis a creditor typically employs in a private arms-length transaction. Governments must also consider moral and public interest factors unique to state action. The Article models such an analysis specific to debt-based occupational licensing restrictions. It then concludes with proposals for specific policy changes to better reflect the government’s unique interests in protecting individual debtors, families, and the broader public.

Keywords: consumer law, consumer credit and debt, family law, tax law, fines and fees, state and local government