Occupational licensing supposedly protects us from incompetent, unqualified and unscrupulous practitioners in all sorts of fields. Don't you know that you can get such an owie if the person doing your nails doesn't have a piece of paper issued by a bureaucrat hanging on the wall? But the premise of that argument is that not only are licensing requirements more effective than consumers asking each other for the name of a good doctor/mechanic/nail place at ensuring the public gets good service, but also that licensing bodies actually check credentials before issuing licenses. That's not always the case, as Arizona's Office of the Auditor General tells us about the licensing of pharmacists in the Copper State.
According to the Arizona State Board of Pharmacy:
The Arizona State Board of Pharmacy protects the health, safety and welfare of the citizens of Arizona by regulating the practice of pharmacy and the distribution, sale and storage of prescription medications and devices and non-prescription medications.
So, no owies for us, right? No unqualified knuckleheads in the back of the drug store holding up the merchandise and saying, "I wonder what this little blue one does?"
Except, State Auditor General Debra Davenport and her staff, in their latest report (PDF) on the board, found:
The Board issued 12 of 40 licenses and permits from fiscal years 2011 and 2012, or 30 percent of those that auditors reviewed, without ensuring that applicants met all requirements. By doing so, the Board was at risk for issuing licenses and permits to nonqualified applicants.
Note that the 40 applications checked are only a sample of roughly 5,000 initial licenses (for pharmacists, techs and the like) and 900 initial permits (for premises) issued during each of 2011 and 2012.
Among the unchecked credentials, says the report, was evidence that applicants had ever attended pharmacy school. The lack of credential checks occurred in four of 30 reviewed licenses, and eight of ten permits. The auditor's office attributed the problem to "a lack of policies and procedures" and inadequate applications.
Why would the The Board of Pharmacy be so lax? Well, it's probably worth knowing that the body doesn't receive revenues from taxes, but funds itself out of the fees it charges. The more paper issued, the more fees.
More to the point, though, licensing has never really been about ensuring qualifications and protecting the public. As Morris Kleiner, a labor professor at the University of Minnesota, told the Wall Street Journal in 2011, "Occupations prefer to be licensed because they can restrict competition and obtain higher wages. If you go to any statehouse, you'll see a line of occupations out the door wanting to be licensed."
Kleiner reported that as of 2008, 23 percent of American workers need licenses of some sort to do their jobs, up from five percent in 1950. Not surprisingly, growth in employment is a lot faster in occupations in states where they're not licensed than in states where they are, by about 20 percent. And consumers pay more to licensed workers than unlicensed ones.
As we've seen, those licensed workers aren't necessarily more qualified. In fact, licensing bodies like the Arizona State Board of Pharmacy may have no idea of their qualifications.
Chances are, though, that their employers do check their credentials, since they have some skin in the game and a certain interest in having competent people on the job. A combination of word of mouth and liability concerns almost certainly offers better protection to the public than licenses issued by bureaucrats who have no stake in the quality of their own work, let alone anybody else's.