Occupational Licensing

Rolling Back Occupational Licensing

Republicans and Democrats are starting to agree occupational licensing has gone too far

|

"Arizona requires licenses for too many jobs—resulting in a maze of bureaucracy for small business people looking to earn an honest living," Arizona Governor Doug Ducey argued during his state of the state address in January. "The elites and special interests will tell you that these licenses are necessary. But often they have been designed to kill competition or keep out the little guy. So let's eliminate them."

The Copper State didn't just stop at words. A bill to strip licensing requirements from several overregulated professions, including geologists, landscape architects, and yoga teachers, is now working its way through the state legislature.

You don't often see politicians flocking to reduce their reach into people's lives. To the contrary, they generally get more mileage by expanding their power to aggrandize themselves, and to curry favor with special interest groups—such as established businesses that want to make it tough for competitors to set up shop.

But Arizona's Goldwater Institute published a much-discussed report last year pointing out that occupational licensing has been a losing proposition for consumers and entrepreneurs alike.

"States that license more than 50 percent of the low-income occupations had an average entrepreneurship rate that was 11 percent lower than the average for all states," the report noted. Unsurprisingly, people with limited resources get whacked the hardest. "[T]he higher the rate of licensure of low-income occupations, the lower the rate of low-income entrepreneurship."

At the same time, "those who hold licenses within licensed professions have 15 percent higher wages than those in unlicensed professions" because of reduced competition. That's a cost that has to be picked up by those hiring the services of licensed professionals designing their yards, teaching them yoga, or providing any of a host of services in fields with limited competition.

That's a problem in a country where the percentage of the workforce covered by licensing laws rose from less than 5 percent during the 1950s to 20 percent by 2000 and 29 percent in 2006, according to research by Morris M. Kleiner and Alan B. Krueger. A lot of fields have been effectively closed to new entrants with limited resources. And Americans are paying higher bills than necessary as a result.

It might be worthwhile if we were being made safer by those legal barriers, but that's not necessarily the case—even in highly technical fields with direct involvement in health issues.

"[M]ore stringent occupational licensing of dentists does not lead to improved measured dental outcomes of patients, but is associated with higher prices of certain services, likely because there are fewer dentists," Kleiner found in a separate look (PDF) at the problem.

Goldwater's report was favorably cited just months after its publication in another report by the U.S. Department of Treasury, the U.S. Department of Labor, and the president's Council of Economic Advisers.

"By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars," noted the federal document.

In the age of seemingly intractable political disagreements, a Democratic White House agrees with Arizona's Republican governor that occupational licensing is a profoundly bad idea that does enormous damage to economic opportunity and household budgets. Is this (don't say it too loudly) evidence of a bipartisan breakthrough?

Maybe so. At a February Senate Judiciary Committee hearing, both Democratic and Republican senators expressed shock at the high costs and lost opportunities inflicted on the country by licensing laws.

Arizona lawmakers aren't alone in acting to undo some of the economic damage they and their predecessors have inflicted on their constituents. North Carolina legislators are similarly considering efforts to strip licensing requirements from barbers, librarians, locksmiths and myriad other occupations currently regulated by the state.

Kentucky's governor has been sent a bill eliminating licensing requirements for hair-braiders. That follows in the steps of Nebraska, which already adopted a similar measure.

When Delaware's Governor Jack Markell (D) called for easing professional licensing requirements in January, state Republicans responded with a proposal to do just that.

Even California, which regularly ranks at or near the bottom on measures of economic (and other) freedom, is reconsidering its red tape ways. The Little Hoover Commission, an independent oversight agency, is in the midst of public hearings on the state's occupational licensing laws.

And groups that battle licensing rules in the courts, like the Institute for Justice, received a boost last year when the U.S. Supreme Court ruled that state licensing boards, which are generally dominated by members of the professions they regulate, deserve close scrutiny. "Active market participants cannot be allowed to regulate their own markets free from antitrust accountability," the court said in a case involving the North Carolina State Board of Dental Examiners.

Some regulatory boards, including the Washington State Bar Association, proactively reined in their activities in anticipation of litigation. Montana is among the states considering controls and curbs on licensing agencies in the wake of the court's decision.

We may not be smart enough to avoid weighing ourselves down with stupid policies like licensing laws. But progress in Arizona, North Carolina, and elsewhere is evidence that we just may be smart enough to fix the harm once it's impossible to ignore.

NEXT: $15 Minimum Wage Bills Signed into Law, Supreme Court Rules on State District Boundaries, Princeton Won't Strip Woodrow Wilson's Name from Buildings: P.M. Links

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. But Arizona’s Goldwater Institute published a much-discussed report last year pointing out that occupational licensing has been a losing proposition for consumers and entrepreneurs alike.

    I’m not sure what possible interest legislators and regulators would have in that fact.

    1. Some parasites realize that a healthy, profitable host is a host you can take more from.

      1. So they’re furiously calculating money currently made from fines and fees vs. extra money made from taxes. Dozens of accounting jobs created just by having this discussion!

      2. Always nice to be reminded that at best we can get the political class to do the right thing for entirely the wrong reasons.

        1. There are no “right reasons”. It’s the height of folly to assume politicians will do anything other than what is in their best interests; that’s the same kind of thinking that socialists do when they think people will work in collectives for the common good without trying to improve their own lot individually. Government is a fool’s game, but if you’re going to have it, people should at least be clear-eyed about the fact that the politicians are there first and foremost for themselves.

          1. As somebody over fifty, With bad teeth and gout, I have no illusions where I would be in an Anarchy – somewhere near the bottom of the pile, whimpering. That said, i trust no government. Not just MY government, ALL governments.

            1. there are equalizers out there.

  2. L…Lib…Libertarian moment?

    1. “Do you have a license for the cat that’s got your tongue, sir?”

      1. nice one!

  3. It seems like, after conservatives have been laboring in the heat of the day fighting these licensing laws, some progs are signing on at the eleventh hour – which is fine, glad to have them aboard.

    But the progs haven’t unanimously given up on these licenses, as the linked article about North Carolina, by a skeptical reporter, indicates:

    “Our leaders at the state capital are going to be asked this spring to weigh public safety and consumer protection against job creation and small businesses….

    “Conservative organizations want the General Assembly to get rid of a lot of these [licensing requirements]….

    “A lot of people spent time and money going to school to get qualified for their licenses. Then they spent more money on state exams and licensing fees.

    “They’re apt to feel they wasted their time and money if the requirements are taken away. And they’ll be especially irked to face new competitors who never ran the training, testing and licensing gauntlets. These competitors could draw away their customers despite having less training – and possibly no training at all.

    “When the license requirement ends, say, for electrologists, the customer will have one less assurance that the man sticking electrified needles into her skin to zap her hair follicles knows what he is doing.

    “And that’s something the Joint Legislative Administrative Procedure Oversight Committee should consider when it takes up the issue Tuesday.”

    1. “They’re apt to feel they wasted their time and money if the requirements are taken away.”

      How they feel is irrelevant. It is already a fact that they wasted their time and money, even if they had a good reason for doing it (avoiding fines/jail).

    2. And they’ll be especially irked to face new competitors who never ran the training, testing and licensing gauntlets. These competitors could draw away their customers despite having less training – and possibly no training at all.

      If they think their training and licensing is valuable to potential customers, they should advertise the hell out of these qualifications.

      1. Bingo!

      2. But that’s haaaaarrrrdddd! And it doesn’t guarantee customers!

      3. I just hope the abolition of the license as a requirement is not accompanied by a ban on advertising one’s having been licensed. That seems to be the way things work, though.

      4. That, of course, is assuming that their training and licensing IS valuable. The training I can see, but licenses are generally only as valuable as the paper they’re printed on. Maybe just developing a reputation for being good at what you do is better than a license.

    3. “They’re apt to feel they wasted their time and money if the requirements are taken away. And they’ll be especially irked to face new competitors who never ran the training, testing and licensing gauntlets. These competitors could draw away their customers despite having less training – and possibly no training at all.

      Pratchett describes the method for the government of the Counterweight Continent to hand out certifications and jobs. Third Night Soil Bucketman (and for eg;) must compose a poem about spring plums. And it’s true, doing away with this system is so mean to the guy who won the position last year for his poem about spring plums, and so mean to the guy who spent all year studying for this year’s open testing on spring plum poetry.

      On the other hand, this year they might get someone who knows which end of the shovel is the business end.

      1. is THAT how they got to be known as “plummers”?

    4. They’re apt to feel they wasted their time and money if the requirements are taken away. And they’ll be especially irked to face new competitors who never ran the training, testing and licensing gauntlets. These competitors could draw away their customers despite having less training – and possibly no training at all.

      They’re basically admitting that their business model is probably obsolete and that they need government support to even stay afloat lest some upstart newcomer find a better way to do it.

    5. The ratchet is only supposed to go in one direction.

    6. I’m an unlicensed professional and I still go to trainings and seminars. I let my clients know and many of the licensed professionals who see me at these gathering know and then hire me. word gets around when.

    7. The reporter in this instance is as big a fool as most other reporters. Maybe they should be licensed.

  4. I wonder if a person (oh, let’s say a Wookie-looking lady) would need some kind of certification/licensing in order to be permitted to create nationwide school nutrition guidelines?

  5. “It might be worthwhile if we were being made safer by those legal barriers,”

    No it wouldn’t. I’ll decide what trade off between price and safety is appropriate when I buy goods and services thank you very much.

    1. How can you be trusted to make that decision, though? What if you’re wrong!? The state just wants to protect you from your own ignorance and illogic.

      1. Selecting a barber without input from the state is a choice that you will live with forever.

        /yer gonna go blind

      2. Exactly. People are too stupid to make those decisions for themselves, so we need a government elected by those same people to make those decisions for everyone.

        1. This is one of my favorite points to make.

          So I am too stupid to make this decision for myself but I am somehow smart enough to walk into a voting booth and make that same decision for complete strangers?

          Proggie/ That’s right because democracy!

          1. It’s the idea that collectively we’re smart, but individually we’re dumb or ignorant about specific things?that the outliers on the low side will be negated by numbers in collective decision-making, but cannot in making decisions for themselves.

            1. Which is funny, because often we’re collectively very dumb on many things, instead.

            2. Which would make sense if we were averaging our guesses to figure out how many jellybeans are in a jar. Political choices are not about averaging guesses. Political choices are discrete.

              Ie
              require licensing for x or don’t require licensing for x.

              We don’t average out the opinions of everyone and come to an average public policy. We have multiple choice policies and the one that is the most popular among voters or 100 sociopath politicians is the one we go with.

              McDonalds is popular. That tells you all you need to know about basing our decision on whatever option in a multiple choice test is the most popular one.

        2. A lot of government action is based on a distrust of the people, and vice-versa.

          Sad fact of life is that all too often, both sides have a point – so there’s always something to point to.

          If ‘common sense’ was not an oxymoron, a lot of this would go away.

          I want to live on the planet where folks are reasonable…

    2. that is the beauty of a truly free market system. But,politics, you know.

      REMINDER: FASCISM defined: government control of private means of production. If all this gumminy goombah meddling and payola ain’t “control” then WHAT ISIT?

    3. Now that is a libertarian position. Good for you.

    1. How does someone like this not get tarred, feathered, rode out of town on a rail and dumped in a ravine?

      1. Cause we’re too busy bitching about the Cats getting knocked out of the tournament…

        1. The Cats? They just won the tournament.

          1. UK, not Villanova. I admit I’m a casual fan but living near and working in Lexington, it’s borderline cultish.

            1. I lived in Lexington for 7 years. There is nothing borderline about it.

        2. Also, people are not wearing enough hats.

      2. That is something that happens in a free country.

  6. Unlicensed Mexican brain surgeons on weed.

    1. They peaked after their second album.

      1. Wall of Voodoo? Not really. The second album was their peak.

    2. You have to admit, it is , still, strange that, after completing medical school in the US, a license is required to determine competence. Shouldn’t graduation from an accredited US medical school establish competence? Maybe that is a control thing, as well!

  7. This is a healthy trend. Years ago you could become an engineer by working as a drafter and moving on up over the years as you gained knowledge and proficiency.

    Now we have the whole licensure associated with being a Professional Engineer. It used to be that with enough experience and letters of recommendation you could sit for the proficiency exams and become licensed. Then they took that away and you need to have a BS in one of the recognized engineering disciplines (mechanical, electrical, civil, etc.) And the degree had to be from a college that is ABET accredited or independently evaluated to be equivalent to an ABET accredited course load.

    More recently the push has been to require a Master’s in Science in engineering, which is horse shit. First, what a lot of engineers do in construction isn’t that complicated. And there aren’t a lot of relevant degree programs for a masters. Meaning I could study some competely unrelated topic to what I do and satisfy the requirement.

    Happily the wave of support for that idiocy has started to abate. They keep rolling back the proposed timelines. It’s nothing more than silly protectionism at its worst.

    1. I feel you on this one. I discovered a little too late in life that I should have gone straight into mechanical engineering but alas, I’m sitting on an engineering technology degree. So while I’m ATMAE certified, I’m not ABET certified. I have a drafting job in a design engineering office, but I foresee a lot of hoops to jump through to get my career where I want it to be.

    2. Yup. I’ve designed, engineered, and built, some fairly substantial stuff just by eyeballing it all. Like a derick mounted on a fishboat deck to lift out a one tonne herring punt and set it onto the deck chocks when in transit. After it was installed and fitted up to the hydraulic system, some wise guy came alongside in HIS punt, tied up to go ashore, and made some disparaging comments about that rig. That’ll crumple the first time it picks a punt…. empty. No way can it handle that work. He came back an hour and a half later to find his punt dangling from the bow and stern eyes, eight feet off the water. That boom worked fine for several years that I know of. Then I moved away so I don’t know. It may yet be working a few decades later. I guess the Coast Guard passed it, as they gave the vessel her certificate to go fish…..

  8. How about we wait for the other shoe to drop before we celebrate this Moment, eh?

  9. What happened to the African cell-phone post?

    1. And what happened to the A. M. Links?

      1. Hitler?

        1. He’s on the list of suspects along with the Illuminati, and the Reverse Vampires.

          1. Illuminated Hitler the Day Walker

        2. “Hitler”

          Trump, they could not find a Trump story so they can’t do morning links

          1. I’m sure some politician, somewhere, has said something stupid. Light up Hillary’s ass, and let’s get this show on the road!

          2. I’m sure some politician, somewhere, has said something stupid. Light up Hillary’s ass, and let’s get this show on the road!

      2. I too am mourning the lynx.

    2. cell phones don’t need posts. They got no wires. UNless the African ones are really old…….

  10. Do we need licenses to get links?

  11. Mourning Lynx! Mourning Lynx! Mourning Lynx!

      1. *sets fire to mattress and hangs it out the window*

        /Chicago Public Housing

        1. *drives up in van and sets up multiple cameras*

        2. I wonder if it’s ENB’s turn.

    1. Psy-ops.

      Sneaky, sneaky Jacket.

    1. Holy shit. Yes, we all know that any revered historical figure would hate the Republicans and approve of the Democrats/Proggies, because they must! These people are absurd.

  12. See, there’s the death of the libertarian moment right there — what goos is freedom if the links don’t run on time?
    We need to install a fearless leader to make the links run on time.
    We demand it.
    Now.

    1. Trump, Make Links Great Again!!!!!!

    2. You know who could have made the links run on time?

      1. Mother Goose?

  13. I demand a minimum of 15 links now! We deserve it!

  14. Man, AZ is working hard to “trump” TX as far as leaving people the hell alone and not butt in where they are clearly not welcome.

    Except for that steaming pile of rancid corn-turd Joe Arpaio of course.

    1. Stupid comment from a stupid man. So you have a problem with the Sheriff enforcing the law? Idiot.

  15. RE: Rolling Back Occupational Licensing
    Republicans and Democrats are starting to agree occupational licensing has gone too far

    Correction: This should read, “Republicans and democrats are starting to agree occupational licensing has not gone far enough.

    You’re welcome.

  16. In many California towns you have to have a business license just to conduct business and its a misdemeanor for not getting one. I had to pay a city $42 dollars to work in their town for one day only. who do they think they are helping, protecting. In the town I live I asked why I have to have one and they said so the police know where you are if anything happens. I told her thats what my address is for and my taxes already pay for the police. Blank stare as usual from officialdome.

  17. Before I saw the bank draft which had said $9426 , I didnt believe that…my… brother woz like actualy earning money part-time at there labtop. . there uncles cousin has done this 4 less than fifteen months and by now repaid the dept on there place and got a great new Mini Cooper . read the full info here …

    Clik This Link inYour Browser
    http://www.JobToday60.com

  18. One industry in Washington state that has gotten completely out of control is onsite sewage systems. Much of the state is rurasl, and insite desposal is the only practical answer. When I bought about 25 years ago gravity feed systems were the norm, only when the soil could not absorb the treated effluent was a “designed” system required, and the homeowner could install (inspected of course). Then they began requiring designs is many more situations next ONLY certified pros could install. homeowners suddenly were too stupid to follow the design plans. Now the county where I am will just not allow any new gravity systems. We MUST use the pumps, timers, force-fed mounds, which do not work so well in our wet winters, nor when the power isout, a not uncommon situation here. The whole scheme has grown out of the few designers making work, and guaranteeing they will get it. Now a new project needs to budget upwards of $50,000 so the new occupants can flush the toilet. Oh, and only certain TYPES of designs are acceptable. I tried to get a different type approved….. no way. WE did not invent that, so YOU cannot use it. A racket or what?

  19. Max . true that Gregory `s st0rry is impossible… on wednesday I bought Aston Martin DB5 since I been bringin in $9774 this last five weeks and more than ten/k this past-month . it’s by-far the best-job Ive ever had . I began this 4 months ago and practically straight away was bringin home minimum $81, per hour
    +_+_+_+_+_+_+_+_+ http://www.earni8.com

  20. ??Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go to tech tab for work detail.

    +_+_+_+_+_+ http://www.path40.com

  21. Start making more money weekly. This is a valuable part time work for everyone. The best part work from comfort of your house and get paid from $100-$2k each week.Start today and have your first cash at the end of this week. For more details Check this link??

    Clik This Link inYour Browser
    ? ? ? ? http://www.ReportMax90.com

  22. I’ve made $76,000 so far this year working online and I’m a full time student.I’m using an online business opportunity I heard about and I’ve made such great money.It’s really user friendly and I’m just so happy that I found out about it.

    Open This LinkFor More InFormation..

    ??????? http://www.selfcash10.com

  23. Start making more money weekly. This is a valuable part time work for everyone. The best part work from comfort of your house and get paid from $100-$2k each week.Start today and have your first cash at the end of this week. For more details Check this link??

    Clik This Link inYour Browser?

    ???? http://www.selfCash10.com

  24. my step-mum just bought a new cream Toyota Highlander only from working off a pc… browse around this website

    ??????www.paypost50.com

  25. I can’t believe the number of spam posts on this site. What the hell is wrong with Reason. Why can’t they delete these stupid posts?

  26. I can’t believe the number of spam posts on this site. What the hell is wrong with Reason. Why can’t they delete these stupid posts?

  27. til I saw the draft which was of $6881 , I didnt believe that my mother in law had been realy taking home money part-time on their laptop. . there best friend has done this 4 only twelve months and at present took care of the mortgage on there condo and got a top of the range Subaru Impreza . Learn More ….

    Click This Link inYour Browser….

    ?????? http://www.Reportmax20.com

  28. I’ve made $76,000 so far this year working online and I’m a full time student.I’m using an online business opportunity I heard about and I’ve made such great money.It’s really user friendly and I’m just so happy that I found out about it.

    Open This LinkFor More InFormation..

    ??????? http://www.selfcash10.com

  29. before I saw the bank draft which had said $9426 , I didnt believe that…my… brother woz like actualy earning money part-time at there labtop. . there uncles cousin has done this 4 less than fifteen months and by now repaid the dept on there place and got a great new Mini Cooper . read the full info here …

    Clik This Link inYour Browser??

    ? ? ? ? http://www.SelfCash10.com

Please to post comments

Comments are closed.