New White House report gives states a license to deregulate
Requirements that individuals must obtain licenses before practicing particular occupations have exploded in recent decades. In the 1950s, 5 percent of Americans worked in a field requiring an occupational license. Today it’s more than 20 percent. Getting a license can require thousands of dollars and years of instruction, and is especially hard on groups like military spouses, who may have to get relicensed when they move to a new state.
Lawmakers’ stated motivation for passing occupational licensing laws is to protect public health and safety by ensuring a minimum level of quality among practitioners. We don’t want someone practicing open-heart surgery when his only training is watching a “how to” video on the Internet.
However, while licensing might make sense for professions like doctors, most licensed occupations do not fall into that category. Depending on your state, you may need a license to do anything from braiding hair to arranging flowers.
Not only are licensing requirements burdensome for applicants, but in most cases, the connection between licensing and higher-quality service is pretty thin. Of the more than 1,100 occupations licensed in at least one state, fewer than 60 are regulated in all 50 states. The requirements for getting a specific license also vary greatly from state to state. As the White House report notes:
Michigan requires three years of education and training to become a licensed security guard, while most other states require only 11 days or less. South Dakota, Iowa and Nebraska require 16 months of education to become a licensed cosmetologist, while New York and Massachusetts require less than eight months.
These differences allow researchers to see whether stricter licensing rules actually result in higher quality of service. The results generally aren’t pretty. A variety of studies have found that licensing requirements have no impact on quality of services for occupations ranging from floristry to teaching. That might be because many licensing requirements are more about checking a box than they are about ensuring quality. Alternatively, it might be that the need for businesses to provide good service if they want to stay in business does about as good a job of ensuring minimum quality as licensing does.
By contrast, studies have found that licensing does increase the price of services between 3 and 16 percent, and reduces the number of practitioners in the licensed occupation. In other words, occupational licensing often hurts consumers instead of protecting them.
The White House report suggests that states look at certification as an alternative to licensing. Certification is similar to licensing, except that it’s not mandatory. Someone who wanted to cut hair without certification as a barber could still do so, but would have to let customers know that he or she wasn’t certified. This option would serve as a reality check, keeping the requirements for certification from expanding into inanity.
While a number of groups (such as the libertarian Institute for Justice) have been highlighting the problems of occupational licensing, the issue hasn’t gotten nearly the attention it deserves. Hopefully the administration’s report will help show that occupational-licensing reform is an issue that deserves support from across the political spectrum.