To: Scott Jenkins,
Subject: Occupational Licensing
Date: Mon May 19 19:47:40 MDT 2014
Government regulation of occupations comes in the form of registration, certification permits, and licensure. A license gives an individual a “right to practice” legally. Occupational licensing has grown dramatically in the past 60 years. In 1950, one in twenty U.S. workers needed the government’s permission to pursue their chosen occupation. Today, that figure is almost one in three.
Proponents of increased licensing argue licensure protects public health and safety while improving the quality of services. If service providers are not required to get licenses, the public will have low-quality, unsafe services, according to some legislators.
Researchers who have studied the issue disagree. Carolyn Cox and Susan Foster find the costs of occupational licensing likely outweigh any presumed benefits. Occupational licensing increases the cost of providing professional services, and the price to consumers increases as a result. A report by the FTC’s Bureau of Economics found the average price for certain eye care services was 33 percent higher in places with licensure restrictions compared to those without. Thus licensing hurts consumers instead of protecting them. Jack McHugh of the Mackinac Center for Public Policy states, “The goal [of advocates] is not to protect the public, but instead to raise barriers to new competitors who might cut prices and lower profits.”
There is little evidence that licensing increases service quality. The American Society of Interior Design, for example, has fought for 30 years to increase regulation in the industry. They claim unlicensed designers present a threat to consumer health and safety, yet have produced no evidence of it. Their fight has allowed the industry to reap the financial benefits of reduced competition and a government-protected occupation.
These regulations disproportionately harm the poor. With less work experience and fewer employment opportunities, the poor are unable to break into entry-level positions or businesses requiring little start-up capital because licensing laws exclude them, according to Adam Summers of the Reason Foundation. On average, low- and medium-income jobseekers in licensed professions are required to spend nine months in education or training, pass an exam, and pay more than $200 in fees. The laws also restrict minority entry into professions, as proven by severe drops in the number of African-American plumbers after states enacted licensing laws.
Overuse of government-mandated occupational licensing reduces competition and increases prices of basic services, all in the mistaken belief the government is improving the quality of services. Less-stringent certification and voluntary certification are viable alternatives that allow consumers to choose services themselves. For example, when Mississippi reduced the registration requirement for African hair braiders, 300 new braiders entered the state. Many moved from surrounding, restrictive states, and some came out of the informal economy. Reducing licensing regulations helps an economy grow and increases competition, which ultimately benefits consumers.
The following documents provide additional information about occupational licensing.
Occupational Licensing: Another Government Obstacle to Earning a Livinhttp://news.heartland.org/newspaper-article/2012/08/15/occupational-licensing-another-government-obstacle-earning-living
We’re All Licensees Now
Does Occupational Licensing Make Sense?
Case Example: Occupational Licensing Unveiled—It’s Huge
Occupational Licensing: Ranking the States and Exploring Alternatives
Occupational Licensing: Protecting the Public Interest or Protectionism?
The Costs and Benefits of Occupational Regulation
The Prevalence and Effects of Occupational Licensing
License to Work: A National Study of Burdens from Occupational Licensing
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit The Heartland Institute’s Web site at http://heartland.org, and PolicyBot, Heartland’s free online research database, atwww.policybot.org.
If you have any questions about this issue or the Heartland Institute Web site, contact Heartland Institute Government Relations Director John Nothdurft at firstname.lastname@example.org or 312/377-4000.
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