Occupational Licensing

New Jersey's Attacks on Unlicensed Movers Hurt Entrepreneurs and Consumers

Once again, government would best serve the public by just getting out of the way.


James Hardy/Altopress/Newscom

When New Jersey officials busted unlicensed movers in 2015, they trumpeted their efforts against businesses "who were allegedly targeting Asian and Latino communities in New Jersey." Last week, they announced the results of their sting against unlicensed enterprises that sought to provide moving services to "an upscale neighborhood in Montville." Garden State apparatchiks went from pretending they're protecting people "largely unaware that these unlicensed companies are in violation of the law and are avoiding requirements designed to protect consumers from fraud and deceit" to shielding wealthy people from cutting deals with the businesses of their choice.

In neither case was anybody being protected—except for politicians' buddies, being sheltered from competition. The evidence continues to show that occupational licensing hurts opportunity and hikes prices without enhancing safety.

There's wide agreement that licensing laws make it hard for people to start businesses, enter trades, and move from place to place in search of work. Such burdens fall especially hard on those with fewer resources to begin with.

"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," a much-cited Goldwater Institute report noted in 2015. "The higher the rate of licensure of low-income occupations, the lower the rate of low-income entrepreneurship."

Democrats and Republicans alike find this argument and the data behind it compelling. They note that licensing poses barriers to entry that limit access to many trades. This cuts off economic opportunity for the poor, and also limits choice for buyers of goods and services.

"[B]y imposing requirements on people seeking to enter licensed professions—such as additional training and education, fees, exams, and paperwork—licensing reduces employment in the licensed occupation and hence competition, driving up the price of goods and services for consumers," the Obama administration acknowledged in a 2015 report.

The Trump administration agrees.

"Excessive licensing raises the cost of entry, often prohibitively, for many careers, barring many Americans from good, family-sustaining jobs," U.S. Secretary of Labor Alexander Acosta warned earlier this year while announcing a federal program intended to streamline state-level licensing requirements and make it easier to move across borders without jumping through repetitive sets of expensive bureaucratic hoops.

Hoops like those posed by the New Jersey Division of Consumer Affairs.

"You must carry a copy of your license on each moving truck and display one in each office," the eight-page New Jersey Public Movers and Warehousemen License Application demands (PDF). "The applicable fee is $400 plus $35 for each license. e.g. ABC Moving Company has office, one registered warehouse and 5 trucks. ABC's annual fee is $400 + 6 x $35 ($210)."

The Garden State also demands hefty insurance coverage—an extra expense not necessarily within reach of an entrepreneur with assets limited to little more than a strong back and a van.

Applicants must provide their citizenship status, ensuring that a fair smattering of members of the "Asian and Latino communities" supposedly fretted over by state officials may not qualify to legally engage in the moving business.

The application goes on to note that "your license will be denied" if you are behind on student loans or child support payments. Apparently, offering to move people from one home to another in return for monetary payment is an unacceptable means of catching up with such financial obligations.

In their breathless press releases about catching unlicensed movers in the act of loading washing machines and sofas onto trucks, New Jersey officials always insist that they are "protecting consumers against fraud and other risks."

But they're not.

"Most research does not find that licensing improves quality or public health and safety," the 2015 Obama administration report noted after surveying years of research. "Stricter licensing was associated with quality improvements in only 2 out of the 12 studies reviewed."

Licensing can fail to improve health and safety even in sophisticated fields like medicine.

"More 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," concluded a study published in 2000.

"Optician licensing increases optician earnings with no measurable benefit to consumers," another study revealed just three years ago.

And New Jersey officials want us to believe that their licensing laws and multi-agency stings (yes, really) protect consumers who hire strong people to lift and carry stuff?

For a clue as to why New Jersey is really so insistent on licensing movers, notice the phrases that keep recurring in research on licensing laws: "driving up the price of goods and services for consumers," "higher prices of certain services," "increases optician earnings"…

Licensing is a great racket for those who are already ensconced in an industry and want to get keep competitors out and prices high. And New Jersey's governments has a long history of implementing laws to protect established and well-connected businesses from innovation and competition. Just look at how it became one of only two states with bans on self-serve gas after an entrepreneur named Irving Reingold tried to shake things up in the 1940s.

"The other gas station operators didn't like the competition. Someone tried shooting up Reingold's station. But he installed bulletproof glass, so the retailers looked for a softer target—the Statehouse," Star-Ledger columnist Paul Mulshine reported. "The Gasoline Retailers Association prevailed upon its pals in the Legislature to push through a bill banning self-serve gas. The pretext was safety, but the Hackensack fire chief had already told all who would listen that Reingold's operation was perfectly safe."

Then, as now, government officials pretended to protect the public while actually helping their buddies and harming entrepreneurs and consumers. Then, as now, the government would best serve the public by just getting out of the way.