Posted on 05/29/2014 12:43:18 PM PDT by SeekAndFind
University of Minnesota public affairs professor Morris Kleiner has written extensively on the topic of occupational licensing and has been featured before on CD here and here, and by Jimmy P here. Among his key findings:
1. Occupational licensing drives up costs to consumers. Licensed workers earn 15% more on average than their unlicensed counterparts in other states. Across the U.S. economy, occupational licensing adds at least $116 billion a year to the cost of services.
2. For several occupations that are regulated in some states but not others (e.g. librarians, nutritionists and respiratory therapists), employment growth for those professions was about 20% greater in the unregulated states between 1990 and 2000 than the regulated states.
3. In the 1970s, only about 10% of workers needed an occupational license, but by 2008, almost 30% of the work force needed them.
4. Occupational licensing does nothing to close the inequality gap in the US, and in fact probably makes it worse because it raises wages for some licensed professions but “does little to help to help the bargaining power of the most vulnerable workers.”
The New York Times today featured an op-ed by Professor Kleiner titled “Why License a Florist,” here’s an excerpt:
In Minnesota, more classroom time is required to become a cosmetologist than to become a lawyer. Becoming a manicurist takes double the number of hours of instruction as a paramedic. In Louisiana, the only state in the country that requires licenses for florists, monks were until recently forbidden to sell coffins because they were not licensed funeral directors.
These regulations are not just unusual cases of state laws run amok but deliberate policies from one of the fastest growing labor market institutions in the United States: government licensing of jobs. This form of regulation — largely established by state governments and implemented through their licensing boards — is often referred to as “the right to practice.” Under these laws, working in a licensed occupation is illegal without first meeting government standards.
In the 1970s, about 10 percent of individuals who worked had to have licenses, but by 2008, almost 30 percent of the work force needed them (see graphic above for some examples). With this explosion of licensing laws has come a national patchwork of stealth regulation that has, among other things, restricted labor markets, innovation and worker mobility. There is a role for government in protecting the public from incompetent or unscrupulous service providers, but there is little reason for math teachers to be relicensed every time they move from one state to another.
Professor Kleiner goes on to explain that the growth of occupational regulation has prompted opposition from both the right (concerns about economic liberty and reduced competition) and the left (concerns about the poor, who are forced to pay higher prices and face barriers to getting jobs), and then offers some public choice reasons for the ongoing expansion of occupational licensing:
If both the left and right oppose more occupational regulation, why is it growing? From the time of medieval guilds, service providers have had strong incentives to create barriers to entry for their professions in order to raise wages. The Dartmouth economist Charles Wheelan’s research showed in the late 1990s that respiratory therapists who organized themselves and raised their profession’s dues in order to lobby for licensing laws tended to be more successful in getting these statutes passed. In contrast, consumers who will be affected by the higher fees of, say, a licensed manicurist are unorganized and arguably underrepresented in the political process.
MP: In other words, it’s a classic case of well-organized, well-funded, concentrated special interest groups using the political process to take advantage of disorganized, dispersed consumers. The well-organized special interest groups can offer politicians benefits and payoffs in the form of political support, donations and votes, while the disorganized consumers offer the politician nothing. Elected officials won’t generally lose any votes or donations from rationally ignorant consumers by supporting more or stricter occupational regulations, but will be handsomely rewarded with votes and donations from the special interest occupations. As Mencken observed, the political process is often like two foxes (special interest groups and politicians) and a chicken (consumers) taking a vote on what to eat for lunch.
Librarian?
This is bad, but nothing like the ridiculous regulation that requires little kids to have a license to sell lemonade in front of their homes.
Librarian?
I thought they only needed a Masters of Library Science and they were good to go. I didn’t realize they needed some sort of license too.
This is why you don’t see many “handy Man” services any more. There are so many licenses you would need to be a handy man these days.
Was there ever a time in America when you could actually teach in a classroom without going through a government sanctioned teacher certification program?
Since all of these “licenses” generate revenue, it’s no surprise that they tend to proliferate.
Just another “tax” on us little ones (used to be people but I believe that they think we are all children now).
bookmark
Yep, licensing is BIG business. I would not at all be shocked to learn that this is a multi-billion dollar (silent) business.
Giving the government that kind of power over you is scary. I can see this being used by the Left to harass people identified as Rightists from getting a job. They are really that vindictive.
Lie Barryan
I live in Calif and have a handyman friend:
He has only a license to paint, and when clients ask him to build a little something he is legally compelled to say no.
Contractors cannot have one affordable contractor’s license —he must have many of them, apparently, in order to perform an array of services.
Some of the license fees are $500 per year, and that is to perform only a couple functions.
He got so sick of it he left California for Texas, where he spent $5,000 for a water well.
He claimed —I’m not sure if this right or not— that in California to drill a water well costs about $50,000.
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