Federal Trade Commission

Occupational Licensing Reform Gains an Unlikely Boost from the FTC

In the fight for economic freedom, entrepreneurs and consumers get new support against self-serving interests.

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"The health and safety arguments about why these occupations need to be licensed range from dubious to ridiculous," Federal Trade Commission Acting Chair Maureen K. Ohlhausen says about her push to roll back government-mandated licenses for an ever-growing list of jobs. "I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows."

Federal concern about the proliferation of occupational licensing requirements isn't exactly brand new. Last year, the Obama administration announced $7.5 million in grants to organizations working to reduce licensing requirements. That's a year after the feds published a report noting that "By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars."

Government officials may be honestly interested in the threats to competition, job opportunity, and consumer prices posed by licensing laws, but the issue also hits close to home. "Military spouses are especially affected by state occupational licensing requirements," noted a 2012 report from the Departments of the Treasury and Defense. "About 35 percent of military spouses work in professions that require state licenses or certification. They move across state lines far more frequently than the general population. These moves present administrative and financial channels."

Shuffled from post to post, military spouses may not have the time to retrain, let alone the money to buy permission, to engage in trades in which they're already perfectly proficient. And unhappy spouses make for unhappy troops—a problem when officials have made wide-ranging and seemingly endless military commitments.

But Ohlhausen's commitment to rolling back licensing takes the matter to a brand new level. The acting FTC chair told Damon Root in the January 2017 issue of Reason that her vision is for the commission to "promote greater competition and choices for consumers, but also liberty for people who want to enter these businesses."

Since then, the FTC has launched a new section of its Website devoted to economic liberty. The new pages point out, among other things, that "nearly thirty percent of American jobs require a license today, up from less than five percent in the 1950s." It adds, "Unnecessary licensing restrictions erect significant barriers and impose costs that cause real harm to American workers, employers, consumers, and our economy as a whole, with no measurable benefits to consumers or society."

Not that licensing is primarily intended to benefit anybody other than a select few. "Dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments," the 10th Circuit Court of Appeals approvingly noted in 2004. Other courts have since differed on the righteousness of overt economic protectionism, but there's no doubt that many occupational licensing laws are meant to do nothing more than limit competition to existing hairdressers, massage therapists, builders, interior designers, and all sorts of other well-connected business people.

But while that effectively lines the pockets of established practitioners, other people suffer. "Because it limits which workers can enter a field, licensing necessarily excludes people who would work in an occupation if the barriers were lower," noted the 2015 federal report. "Fewer workers means higher wages for those who secure a license, but lower wages for excluded workers and higher prices for consumers."

That said, occupational licensing is a vice indulged in primarily by state governments. What can a federal official like Ohlhausen do to make things better? Well, Ohlhausen gets much of the credit for pushing the FTC toward its 2015 Supreme Court victory over the North Carolina State Board of Dental Examiners, which had barred non-dentists from the tooth-whitening business. That's an indication that the federal government's arm-twisting skills might occasionally be turned in a pro-liberty direction.

And Ohlhausen's ascendance comes at a moment when occupational licensing is recognized as a creeping scourge by people across the political spectrum. Republicans and Democrats, liberals and conservatives, and of course libertarians, recognize that forcing people to beg permission—and pay fees and time–to make a living is choking off opportunity and prosperity.

Last month, Arizona Governor Doug Ducey slapped down the State Board of Cosmetology, which had been investigating Juan Carlos Montes de Oca for giving away haircuts without a license. The former homeless man turned cosmetology student faced fines for his charitable efforts on behalf of people still living on the streets.

Ducey's intervention came less than a year after Arizona eliminated licensing for several occupations and eased restrictions for others. If the state had been more aggressive with its reforms, the governor's act of mercy would have been unnecessary, since haircuts given or sold would have been recognized as no concern of regulators. As it is, the State Board of Cosmetology became a laughingstock and may well inspire its own demise.

Florida lawmakers are already inspired. In a state where licenses to cut hair require 1,200 hours of training and a $223 fee, legislators propose to deregulate about two dozen trades so that new entrants can serve willing customers without first jumping through government hoops.

Perhaps recognizing that protecting existing practitioners from competitors is not a winning argument, Curtis Austin, executive director of the Florida Association of Postsecondary Schools and Colleges, unconvincingly told lawmakers that, "if you look at those places where they deregulate these issues in cosmetology, up to 85 percent of people contract skin diseases."

Really? Is there any evidence of that?

On a related note, many schools have established a lucrative sideline for themselves by selling government-mandated training to would-be workers—and those schools are, themselves, licensed.

Michigan has already eliminated licensing for seven occupations, and the Detroit News is urging state officials to ditch more. The paper draws off new Mackinac Center research demonstrating that requiring people to seek government permission before working "worsens income inequality without improving public safety."

Nebraska's Governor Pete Ricketts (R) also wants to reduce or eliminate licensing requirements for about 20 occupations, though his efforts were thwarted this month. Opposition came both from protected practitioners and schools that make a buck selling required training.

The FTC's Ohlhausen is absolutely right that "health and safety arguments about why these occupations need to be licensed range from dubious to ridiculous."

But self-serving arguments by people who profit from the restrictions are pretty effective all by themselves. It's good to have another prominent voice in place to oppose them.

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31 responses to “Occupational Licensing Reform Gains an Unlikely Boost from the FTC

  1. up to 85%, well yeah sure ok.

    1. Fuck! A comment! How’d that happen? What made Reason thing it was *this* one I wanted to publish?

      Fuck edit. Give me a delete button. I was just kidding!

    2. That might be the case, but it might also not be the case.

      1. I will believe that they are really-really serious about cutting back on licensing laws, just as soon as my veterinarian’s license is sufficient for said vet to treat my human diseases, with my permission, of course… It’s MY body, right? It’s NOT about protecting the livelihood of the licensed humanoids-doctors, right??!? RIGHT?!?!?

        1. “It’s your body” only if you’re pregnant.

  2. So is this the libertarian case for federal intrusion into state government? Clearly NOT interstate commerce. Clearly NOT specified a a federal responsibility in the constitution.

    1. 14h Amendment + Eminent Domain? Regulations have never been ruled as taking so that is a stretch legally (I am not a lawyer ftr).

    2. Exactly. This is an issue for the states to decide. While I don’t agree with licensing in general, I also don’t agree with the federal govt overreach.

    3. You could argue it as an equal protection case under the unenumerated rights doctrine.
      I’m never opposed to the feds stepping in and reducing the governmental burden at whatever level.

      1. In other words… You’re all about federal overreach as long as it serves your agenda?

        1. Clearly, given the situation today, there is no reasonable expectation that the government will remain in its constitutional bounds. So why not have it do some good? You aren’t going to get the constitutional toothpaste to go back in the tube.

          And it’s not an uncommon argument that the 14th amendment protects economic liberty from over-burdensome state infringements.

        2. I’m against reducing the size and scope of government. Period.

          1. I’m against periods. Comma.

        3. It’s going to end up serving *someone’s* agenda.

        4. In other words… You’re all about federal overreach as long as it serves your agenda?

          No. In other words … Even the broken clock (fed govt) is right twice a day.

    4. I think I’m pretty OK with the federal government making states stop interfering with people’s economic liberty. Isn’t that one of the things that the 14th amendment was originally intended to do?

      If the federal government just did basic defense and immigration customs stuff, dealt with crimes and commerce issues that really do fall outside the jurisdiction of a single state, and kept the states from interfering with important rights, that would be pretty ideal.

    5. State’s rights don’t mean the states can do whatever the fuck they want.

      1. Which is even truer when you consider States don’t have rights.

        1. Which is even truer when you consider States don’t have rights.

          No kidding. That phrase needs to die in a fire.

        2. Which is even truer when you consider States don’t have rights.

          No kidding. That phrase needs to die in a fire.

        3. I disagree
          “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people”

    6. oh yes it is… FedGov is supposed to make certain states do not restrict the moving of goods or services between states…. if Kansas wants a certain ticket to cut hair, and Missouri wants a different one, then one from one state can’t just drive into the other and its all good.. THIS interferes with interstate commerce….. the very thing FedGov is commanded to stop.

  3. “I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”

    I don’t think she realized what she had with carpet-bombing. It could have been a literal carpet bombing joke, but she bizarrely mixed it up with pillows.

  4. Once the Feds step in, they feel they belong. Seems something along those lines happened seven or eight years ago.

  5. I see she won’t be getting invites into any of the right D.C. parties…

  6. WTF is wrong with the comments in this web site? Hello, testing, 1-2-3…

    1. What’s wrong is that you didn’t pick the gun of modification.

  7. UP TO 85% contact skin disease. Let’s see… two percent falls into that “up to” category, does it not?

    these Mother May I Permission Slips, and the industries that push them, need to be dismantled. In my state, the driving schoold banded together and decided that for anyone under 18 to get their driving license they would MANDATE attending a for hire approved school. Now ain’t that just ducky? From what I’ve seen as the “work product” of those schools, most Dads did a far better job back when they could still do it. Now they’ve mandated that allnew commercial (truck, bus, taxi) driving licenses MUST include VERY costly and lousey quality commercial driver training. What I see on the roads observing the rigs, these schools aren’t doing their job either. But if ya wanna drive a truck.. pay up (four figures, of course). Now my state got in bed with the outfits that, for years, have offered motorcycle training and licensing for those who want it. Now EVERYONE has to pay to attend one of these schools before they can get their Mother May I Card. And besides, they’re no longer content to just have a motorcycle endorsement… oh no. Three wheel and trailer, two KORE endorsements, EACH needing another expensive course. A racket if ever there was one.

    1. I taught my wife to drive. She has a low-vision condition and needs to wear a bioptic telescope to legally drive. The asshat who we were paying far too much was a lousy instructor. I took over the job, and her confidence went through the roof. She passed her exam, with a night time driving restriction. 2 years later, she got that lifted. She has told me on more than one occasion that she probably wouldn’t have gotten her license if not for my patience and encouragement. The last straw from her instructor was the day he yelled at her. We fired him and the rest is history. Last summer, she solo’ed from Arlington TX to Waco for a week long convention for her job. No problems whatsoever. She plans on driving to Austin to see her dad sometime in the near future as well.

  8. “I swear, that bag has up to a million dollars in it. Just gimme change for this pack of gum.”

  9. just as Gerald implied I am in shock that a person able to earn $7711 in 1 month on the computer . go now>>>>>>>>>>> https://qr.net/eyGRuC

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