Licensed out of a job
According to the Brookings Institution, fully 30 percent of professions in the United States today require some kind of occupational license, up from just 5 percent in the 1950s. Shockingly, the United States now requires a greater proportion of its workforce to have occupational licenses than does the European Union. These requirements cost jobs, with the burden falling heaviest on the young, who face higher unemployment rates. The Goldwater Institute estimates 2.8 million jobs are lost each year because of licensing requirements.
While some form of licensing is justified for doctors or other fields whose practice poses genuine health and safety concerns for the public, special interests have over the years successfully lobbied to expand licensing requirements to dozens of professions for which there is no justifiable need. The Florida Legislature recently adjourned for the year having failed to push through a licensing-reform bill that appeared to have momentum, until it was beaten back by organized barbers, cosmetologists and interior decorators.
Despite the quality-control arguments for licensing that persistently are made by entrenched industry interests, there is very little evidence that these licensing cabals provide any real protection or positive benefits for the community or for customers. People still get bad haircuts, or subpar tango lessons, for that matter. The licenses’ main purpose is to limit competition and raise prices by creating arbitrary and artificial barriers to entry.
Pick a state and it is highly likely you will find numerous professions with ridiculous standards. In 33 states, potential auctioneers have to take classes and pay fees — 765 hours of training and a $650 fee in Tennessee, for instance — to prove their ability to talk fast. In Michigan, an aspiring athletic trainer must commit to 1,460 days of training. By contrast, an emergency medical technician is required to complete only 26 days. Mastering the pushup in Michigan apparently is a lot harder than mastering CPR.
The effect of these policies isn’t simply to deny opportunities to those seeking to break into an industry; they also hurt those already certified. Many states have taken the closed-shop mentality one step further by preventing reciprocity of licenses across state borders. This limits workers’ ability to expand their footprint to other states or to migrate to areas where there is greater demand for their services.
It also further limits consumer choice. By limiting who can legally practice a given profession, licensing laws not only artificially constrain supply, but they also stifle creativity and innovation and eventually destroy the very jobs the licenses were created to protect.
The march to reform is starting to pick up, albeit slowly. A 2015 decision by the U.S. Supreme Court curbed the power of North Carolina’s state dental board to shut down teeth-whitening services offered by practitioners who weren’t licensed dentists. The court ruled that some state licensing boards can be held accountable under federal antitrust laws, and the Federal Trade Commission has started to pursue these cabals.
Sens. John Cornyn, R-Texas, and Gary Peters, D-Michigan, recently introduced the New HOPE Act, a bill that gives governors additional authority to fund career and technical education and allows them to use funds for the “identification, consolidation or elimination of licenses or certifications which pose an unnecessary barrier to entry for aspiring workers and provide limited consumer protection.”
Some states also have started to take action. Mississippi Gov. Phil Bryant, a Republican, recently signed a reform bill that bring the state’s licensing boards under the direct control of the governor, attorney general and secretary of state, a majority of whom can veto any new licensing rules. In Arizona, Gov. Doug Ducey, a Republican, has become a champion for licensing reform, recently issuing an executive order that requires the state’s 27 occupational-licensing boards to justify their regulatory standards.
As graduates of the Class of 2017 flip their tassels and toss their mortarboards in the air, we need to make sure that progress continues move forward. Americans should be free to pursue their passions and careers with as little government interference as possible. The 2018 class will be here before we know it.
Image by Prasit Rodphan