Slaying the dragon of occupational licensing
It’s rare to see Republicans and Democrats united on solutions to address poverty. But when it comes to reining in excessive occupational licensing laws, both sides are starting to see the light.
For years, free-market advocates have denounced job-licensing regimes for the ways they restrict opportunity, stifle economic growth and protect the interests of established stakeholders over those of consumers and entrepreneurs. Most would agree that licensing may be justifiable for very highly specialized fields, like doctors. But in many fields, state licensing regimes are more about insulating the “big guys” from competition than about public safety.
It’s consumers and the “little guys” who pay the price for this cronyism. As R Street scholars have explained in the past, florists, hair-braiders, interior decorators and cosmetologists are among the many professions that subject to ludicrous license requirements by state and local regulators.
On this point, even the Obama administration agrees. The White House released a report last summer warning against burdensome and unnecessary licensing laws and encouraging states to look to alternatives.
Because state and local governments usually are the source of these harmful licensing regimes, reforms need to happen outside of Washington. As R Street’s Western Region Director Steven Greenhut detailed in Reason, California recently has taken an important step by convening an independent oversight agency in Sacramento to evaluate the plague of restrictive licensing rules.
Despite this progress, attempts to impose harmful licensing regimes persist—even at a federal level. This week, R Street joined the Institute for Justice and 10 other free-market groups in opposing H.R. 4141, a new bill that would grant the Internal Revenue Service authority to license tax preparers. In our letter to Congress, we note that dozens of laws already regulate tax-preparers. Granting the IRS this new power will force tens of thousands of independent tax preparers to close shop and drive up the prices consumers pay for tax preparation.
Last year, a prescient Cato Institute paper called occupational-licensing reform a “low-hanging fruit guarded by dragons.” Policymakers on both sides of the aisle can agree: by dismantling excessive licensing regimes, we can do a lot to preserve opportunity and ensure access to the American Dream.
However, the fight is far from over. R Street will continue to monitor attempts to use excessive job-licensing laws to stifle competition, and work to slay these dragons once and for all.
