Occupational Licensing a Racket

by Lou Binninger

A friend changed his life after spending half his 40-some years in prison. He completed drug court and has remained free. He is married with 5 children but has struggled to acquire meaningful employment. That doesn’t mean he lacks skill. He is an accomplished barber having learned the trade in prison.

However, though customers would give him a chance with their looks, the government and the Barber and Cosmetology Board won’t. He must spend thousands of dollars and thousands of hours of training, pay testing fees, annual fees and endure oversight for the privilege of making a living.

In the 1950s, about 5% of the American workforce needed an occupational license but today it’s 30%. The practice now has a significant bearing on workers of all skill levels, and extends far beyond doctors, lawyers, nurses, and teachers. It also raises the prices to consumers while not providing them real protection according to researchers.

Occupational licenses are not just state-sponsored certificates to indicate workers have completed some level of training; occupational licensing laws forbid people from practicing their occupation without meeting state requirements. If the rationale for licensing an electrician is to protect public safety, what rationale supports licensing travel guides?

Yet, twenty-one states require a license for travel guides. Among these, Nevada has created the highest hurdle: in 2015 a person hoping to be a travel guide in that state must put in 733 days of training and pay $1,500 for the license.

Our nation is on a licensing binge claiming that the government is protecting the ignorant populace from unskilled and unscrupulous practitioners. It is nonsense and is keeping good people from making a living. Of course, licensing gives thousands of unproductive paper-pushing bureaucrats a salary and retirement for lording it over those who actually provide a product or service for a living.

Some states require that florists and make-up artists meet expensive and time-intensive requirements before they are legal to do their jobs. Also subject to licensing in various states are locksmiths, ballroom dance instructors, hair braiders, manicurists, interior designers, and upholsterers.

If the licensing is supposed to protect and saves lives then why do interior designers, barbers, cosmetologists, and manicurists all face far greater licensing requirements than do Emergency Medical Technicians (EMTs)? And no one working in a restaurant needs an occupational license, but Americans run to them for meals several times each week.

Licensing is no substitute for reputation. In fact, licensing fails to insure quality or safety. For food establishments, the public relies on health inspections and customer complaints to give them confidence. In Third World countries you watch for eateries with a crowd or found with a referral.

The consumer protection argument is weak. It's impossible to take the justification seriously for many of the over 800 occupations that require a license in at least one state that regulates fortune tellers, florists, hair braiders, and movie projector operators.

As social media and the internet have provided numerous instant means to critique, rate, and crucify all kinds of services and products, the market has far surpassed a lame and lethargic government bureaucracy in “protecting the public.” Super-cyber “word of mouth” is more effectual and brutal than government clip-board or tablet jockeys.

Consumer protection from shoddy service providers can be found in current state tort laws and consumer protection bureaus, but best through market forces, without the need for many anti-competitive licensing rules. If consumers valued them, there would also still be a market for certifications, and thus the training that consumers want, not what professional societies believe necessary as a way to shelter their own members from new competition.

Most licenses amount to anti-competition schemes to protect veteran trades-people against new upstarts. It is anti-competition. In fact, licensing boards comprised of practitioners may be legitimate targets for antitrust litigation. The licensing racket limits innovation, keeps prices up and should be ruled illegal.

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