Political change comes slowly, and it’s rare to achieve a strong enough consensus to actually effect a favorable outcome. Perhaps it’s just wishful thinking on a subject I’ve spent the last five years writing about, but there is every indication that we may be nearing that point of consensus on one of the greatest job killers in America: Occupational licensure.
Eleven states have joined a coalition to tackle licensing reform, and it seems like every day there are more articles in the mainstream press pointing out the harm that results from restricting entry into the labor force. This comes on the heels of a White House report and numerous third-party studies pointing out the problems with occupational licensure and containing suggestions for ways to reform the practice. Having to ask permission from the government to earn a living seems like an obviously un-American idea, but it is only recently that people have actually started to think about this practice as oppressive and cronyist, instead of as a protective public safety measure.
This is because advocates of occupational licensing always point to the most extreme examples — surgeons and structural engineers — where a lack of competence can cost lives, but frequently keep silent on the many occupations that can easily be done by unlicensed amateurs with minimal risk to consumers.
Why does a florist need a government-issued license? Why does an interior decorator need one? As one article points out, why does a casket maker in Louisiana need a license, including onerous apprenticeship requirements, to construct and sell a pine box?
Of course, the answer is obvious. Licenses for these fields serve no appreciable public safety function. Their only purpose, aside from raking in cash for the government, is to restrict entry into occupations, so that those already engaged in the business face less competition from would-be rivals. Making it time-consuming and costly to become a florist, for example, benefits those people who already are florists, or those with the resources to easily comply with the requirements.
Incumbents benefit, but who loses? Well, all of us, really. You might think that licensing requirements create a guaranteed minimum standard of service, so that consumers are protected from incompetence, but I’m sure we’ve all dealt with plenty of businesses that hold the required certification and yet still fail to meet even the most basic standard of quality.
In reality, the presence of occupational licenses actually hurts consumers, by reducing their options and by allowing incumbents to keep prices higher. But while you may not feel too much sympathy for the customer who has to pay an extra 50 cents for roses, consider the workers who are hurt as well.
Imposing strict requirements to enter a profession means that those on the bottom rung of the economic ladder, those with the least education and the least money, are boxed out. There might be many people with an eye for interior design, but no ability to complete the required training. These people will instead be forced into lower-paid jobs less adapted to their skills or interests and with less opportunity for advancement. Worse still, they might be forced into unemployment and onto welfare.
A common example of this is the market for African hair braiding. It’s a hairstyle that is in demand all over the country and has the benefit of offering good employment to immigrants who don’t speak good English and who lack other marketable skills. In short, it’s a great way for young women to make a living in an otherwise hostile world. Yet states like New York, where the style is most fashionable, require a costly hairdresser’s license to perform this service, including schooling and exams that are given in English. Needless to say, this requirement curtails opportunity for people who are already struggling to find their place in society.
Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maryland, Nevada, Utah, and Wisconsin are all currently examining their licensing laws with the aim of loosening regulations to help workers. Optimism in the world of public policy is usually misguided, but at the very least, increased interest in this issue will shine a light on how the government goes out of its way to keep people down, rather than allow them to rise to the level of their potential.