Occupational Licensing

Clinton Suggests Paying States and Cities to Fix Bad Licensing Laws

What Hillary Clinton gets right (and what she gets wrong) about occupational licensing and the need for reform

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PETE MAROVICH/UPI/Newscom

In a policy brief released last week, Hillary Clinton's campaign promises "a national initiative to break down unnecessary barriers to starting a company" including reforming occupational licensing laws that "increase costs for everyone and stand in the way of those who are eager to start new careers or open a business."

She's spot-on about the need for licensing reform. Though they are usually defended as being in the interest of public health, licensing laws serve as barriers to entry in many professions, protecting incumbent businesses by making it more difficult for competitors to enter the marketplace. In some cases, they are even crafted and enforced by the very businesses they are protecting—with limited evidence of actually protecting health or safety.

More than one-third of all jobs in the United States is now subject to some form of licensing (up from just one in 10 jobs in 1970, acording to research by Morris Kleiner at the University of Minnesota). Licensing is bad enough for people who want to work in one of those professions, but it drives up the price and goods and services for everyone else, too. A 2015 report from the Heretage Foundation found that the average American family spends more than $1,000 every year on hidden costs from licensing—more than the average family spends on Christmas.

Give Clinton's campaign credit for recognizing the obvious, even if she's not exactly staking out a bold position. There's already a broad bipartisan consensus that onerous occupational licensing laws are bad for the economy. Conservative and free market groups like the Heritage Foundation, the Cato Institute and the Reason Foundation (which publishes this blog) have been taking for years about the need to reform licensing laws. They're joined by left-of-center groups like the Brookings Institution and the ACLU. Even the Obama White House last year published a report detailing how licensing limits individual opportunity and economic growth.

Clinton's policy brief is evidence of that consensus. It cites a report on licensing produced by the Institute for Justice, a libertarian law firm that successfully has challenged onerous licensing laws in a number of states—including a recent victory for hair-braiders in Iowa.

It's good to see candidates on both sides of the aisle embracing the need for reform, Lee McGrath, IJ's legislative counsel, told Reason via email.

"One does not have to pray at the altar of free-markets to realize that reducing licensing would increase opportunities," McGrath said. "Licensing laws exacerbate income inequality, disproportionately hurt minorities, and block reentry into the work force of women and those with criminal records."

After acknowledging the problem, Clinton's campaign lays out two potenital solutions. Both are well-intentioned, but its questionable whether they would be effective.

First, like any good politician, she promises to throw money at it. Any state and city willing to "meaningfully streamline unnecessary licensing programs will receive federal funding to support innovative programs and offset foregone licensing revenue," Clinton's campaign promises.

The question should be obvious: if these licensing programs are "unnecessary," why are they being streamlined instead of abandoned?

More broadly, there's good reason to be skeptical about the effectiveness of essentially bribing states to fix their bad licensing laws. While they might create some revenue for the government, the main reason why many licensing laws exist (and why they are so difficult to change, as Sasah Volokh pointed out last week) is because they serve the interests of private businesses that have captured an arm of the government.

Promising federal cash to states and cities might help break that relationship, but then there's also the question of whether federal taxpayers should have to pay for states to solve these types of problems—something we're already doing, by the way, since the Obama administration handed out $7.5 million in grants last year to "reduce overly burdensome licensing restrictions."

Clinton also plans to work "with states to standardize licensing requirements and reduce barriers for Americans seeking to work across state borders—particularly for military families and spouses who are mobile and often employed in licensed occupations."

This is a well-documented problem within the military community. Imagine a soldier with a husband or wife working in a licensed profession, like being a makeup artist (yes, that's really a licensed profession in most states). Applying makeup to a human face works the same way in Alabama as it does in Florida, but moving across state lines would require getting a whole new license—and going through the 280 days of training that Florida requires before anyone can be licensed as a makeup artist—and that license could be useless if your spouse ends up getting reassigned to a different state in a year or two.

Clinton's right that this is another problem with licensing, but she's wrong to focus only on military families when it comes to a solution. For one, many states already have special exemptions written into their licensing laws to ease the burden for members of the military and their spouses. What about other people with equally legitimate reasons for moving across state lines to pursue economic or personal growth who are prevented from doing so because they're unable to afford the time or money to go through the licensing process all over again? Clinton's porpose seems to ignore them. She would do better to focus on getting states to broaden reciprocal licensing rules so everyone can carry licenses across state lines.

Clinton's also wrong to call for standardization. At first this seems like an obvious answer—if all states had the same requirement, it would be easier to move between them and retain your license—but it ignores the fact that states have a wide range of occupational licensing rules within in the same profession. Does standardization mean all states should adopt Florida's terrible 280-days-of-classes-plus-two-exams requirement for makeup artists or does it mean everyone should use Nebraska's licensing rules that require a $10 registration fee and nothing else.

I know which I'd pick, but the cosmetology schools that benefit from mandatory licensing schemes like Florida's are likely to prefer a different choice.

Instead of calling for a sort of interstate compact based on bad policy, Clinton should encourage all states to loosen occupational licensing laws and abandon licensing requirements that serve no public health interest.

If there's going to be any interstate standardization of licensing rules, Clinton should follow the example outlined by U.S. Sen. Mike Lee, R-Utah, who has sponsored the Allow Act, a bill instructing governments to choose the least restrictive regulation to address real and substantial threats to consumer safety, says McGrath.

"The federal government can lead by cleaning its own house through repealing and replacing its use of occupational licensing," he said.

NEXT: Maybe Donald Trump Is the Real Ferguson Effect

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  1. “Seriously, dude, I think I heard voices coming from inside the giant horse.”

    1. Lighten up man! We won, if getting a giant horse outside your gate is not winning then I don’t know what is.

  2. Umm, well here’s something new, A democrat suggesting that the way to fix something is throwing more tax payer money at it. Clinton cronies in line with their hands out.

  3. a bill instructing governments to choose the least restrictive regulation to address real and substantial threats to consumer safety

    Everything is a real and substantial threat to consumer safety. Therefore the least restrictive regulation is also the most restrictive.

  4. Jesus H. fucking Christ. Implement bad policy. Keep bad policy by adding layers of ugly wallpaper on bad policy.

    1. Worse yet, encourage more bad policy by paying to fix it. If someone paid me extra for all my typoes, I’d be typoeing away like a mad sonuvabitch.

  5. So the solution to bad state laws is to federalize them. I don’t see how that could possibly go wrong.

    1. Hey maybe we can get the feds to browbeat, extort and bribe states to do something about their evil permissive gun laws? No one would ever try that, right? Right?

  6. First, like any good politician, she promises to throw money at it. Any state and city willing to “meaningfully streamline unnecessary licensing programs will receive federal funding to support innovative programs and offset foregone licensing revenue,” Clinton’s campaign promises..

    No, Broheim, they’re not. They’re not at all. They are steeped in the cynical evil that marks everything that Clinton does.

    She simply recognizes that the licensing regimes provide two things: Jobs for government offices that manage the licensing, and revenue streams for the state.

    She seeks to maintain both.

    More broadly, there’s good reason to be skeptical about the effectiveness of essentially bribing states to fix their bad licensing laws.

    Broheim, you strike me as a non-judgmental, decent fellow.

    “Skeptical”? She actually creating an INCENTIVE to institute more licensing schemes by literally paying local governments to adopt them.

  7. Unless her solution involves a moratorium on all new regulations and a reassessment of any existing regulations with the express purpose of eliminating the overwhelming majority (if not all) of them, she’s going the wrong way.

  8. All this cunt cares about is increasing the powers of K-street so she can line her pockets. Talking about small business licensing is cute and works on the dolts. The real angle of her whole being to strengthen the finance industry and military industrial complex to keep the lobbying cash cow rolling. Any of this other stuff is irrelevant in the long run vs her power grabs and graft by her cronies in DC. W will never get a significant portion of the population to vote against the MIC or Wall Street in mass because to many people either work directly or indirectly for these industries.

    Lobbying rackets are tried and true ways to extract money without technically sapping the average person. It gives all of the criminals the excuse of blaming higher costs of doing business on regulation which most americans think they like.

  9. More broadly, there’s good reason to be skeptical about the effectiveness of essentially bribing states to fix their bad licensing laws.

    Aside from the perverse incentives for states to then make more bad licensing laws so they can get paid to subsequently remove them, she is proposing to reward states and cities for their past bad behaviors — and, likely the money would disproportionately flow to Democratic controlled locales.

    Oh, and not a power of the feds under the Constitution.

  10. A moratorium plus a sunsetting provision might make this work, sort of.

    But, really, it’s doomed to failure.

  11. Also, the list of occupations that are licensed is long, and wide, covering virtually every facet of your daily life somehow.

    Except the people who actually make the laws. That can be someone off the street.

    1. “Eric! You stop that right now! People can see you.

      /Eric’s Mom

  12. The solution to shitty laws is always more shitty laws. Can’t actually repeal anything. That is simply not allowed.

    1. What are you some kind of anarchist?

  13. Lochner, mother fucker.

  14. What about other people with equally legitimate reasons for moving across state lines to pursue economic or personal growth who are prevented from doing so because they’re unable to afford the time or money to go through the licensing process all over again? Clinton’s porpose seems to ignore them. She would do better to focus on getting states to broaden reciprocal licensing rules so everyone can carry licenses across state lines.

    Define “better”. See, your way merely helps. Her way carves out special rights for a target demographic, plays it up for PR, provides more bureaucratic jobs and you know – you just KNOW – there’s going to be a juicy contract awarded in here to someone’s nephew who’s a good boy, really, went to school with my wife’s cousin.

  15. A BOBBLE HEAD Hillary?? Now that’s what I call problematic.

  16. “One does not have to pray at the altar of free-markets to realize that reducing licensing would increase opportunities”

    No, one does not. But once one has that realization, one begins looking at other things through the same perspective. One then begins to struggle with serious cognitive dissonance trying to reconcile that view with one’s history of corporate cronyism. One then begins to realize that those free-market worshipers aren’t such kooky weirdos after all.

    Just kidding… one is simply offering platitudes that will be forgotten tomorrow.

  17. the main reason why many licensing laws exist (and why they are so difficult to change, as Sasah Volokh pointed out last week)

    Stop microagressing against poor Ms. Volokh!

  18. 1) W pray tell is the ‘heretage’ Institute?

    And 2) how about they do the exact opposite: threaten to cut off federal funding for transportation, education, etc. unless states cut back on occupational licensing? Given all the shit they’ve run through with the commerce clause I’m sure they can justify it this time.

  19. Why does the federal government need to tackle this through additional funding. If the Interstate Commerce clause gives the federal government authority to regulate guns due to its effect on Interstate Commerce than I don’t get how you would not be able to regulate licensing laws which have an obvious impact on Interstate Commerce.

    The federal government can simply eliminate all occupational licensing laws across the entire nation with a single law.

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