The Harsh Consequences of Occupational Licensing


One of the few issues that is bringing together Republicans and some Democrats in recent years is the issue of occupational licensing, a set of laws that require certain standards of training and testing and fees in order to enter a certain profession.

Over the past 50-60 years, state legislatures have adopted licensure laws at the bequest of various industries. The alleged reason for licensure is to protect the consumer, often for "health reasons," but the industries that now require licensure are far beyond anything that one would reasonably say needs state licensure.

For industries like hair-braiding, why does one need a state license? Why does one need to have hundreds of hours of training, take an exam, and pay the state fees in order to simply braid another person’s hair? It makes no rational sense.

That is, unless you’re trying to suppress competition, which is what occupational licensure laws actually do, despite any claim to the contrary. Those who want to work are being prevented from doing so by bureaucracy and fees, and the only ones whom are served by these laws are the cronies who advocated for the licensing laws.

The result is that contributors to the marketplace are often kept from bringing their services to fruition. That means less money for that person, as well as fewer opportunities for others to earn a living from that new business formation.

As Timothy Kilcullen discusses for The Daily Signal, various industry incumbents have abused the occupational licensing idea to systematically quash anyone who may compete for their customers.

One example is the American Society of Interior Designers. This cartel has spent over three decades lobbying state legislatures to institute licensure requirements. Three states and the District of Columbia gave in and adopted the regulation, while a number of others agreed to titling requirements, which restrict the job titles that “un-certified” interior designers can use.There is no clear consumer protection concern with unlicensed interior designing, and most buyers would probably be able to determine quality without the regulation in place.

Those in the industry claimed benevolent motives, but the result is that starting new businesses, which would compete with existing firms, are bogged down in red tape and fees. It’s a protectionist measure that targets those who want to enter the field, and subsequently stifles entrepreneurship.

It’s not only that industry though; indeed, many other industries have also lobbied for licensure that prevents competition from arising. "Cosmetic dentistry" is another; that is to say, teeth-whitening.

From 2005-2013, 30 states were successfully lobbied to shut down teeth whitening businesses, arguing that they should be restricted to only dentists, citing “health concerns.” Teeth whitening businesses generally offer the same products that could be purchased over the counter, and practitioners rarely make physical contact with their patients. But the dentistry lobby successfully grabbed a line of business from its competitors.

The result of the occupational licensure movement has created a “licensure arms race” for professions previously never licensed.

There is a better way of going about this. Mandating hundreds of hours of training and taking money from people who want to do simple kinds of work is simply immoral. Existing businesses should not be able to effectively wield government power in order to protect their own interests and suppress competition.

If a business wants to keep its customer base away from competition, that business needs to increase the quality of its product or service to do so. If they resort to government force to keep out competition, it indicates that they may not truly believe in the quality of their product, or they simply speak the language of force-only, which is very concerning.

In order to pursue our own happiness in life, we must not be intruding on other people’s means of doing so. A happy and free people do not impede others from pursuing happiness and success, and laws that do such must be repealed by states that have enacted them.