Decreasing burdensome occupational licensing creates jobs, helps the poor
Recently there have been a number of articles highlighting the high cost of burdensome occupational licensing laws — costs that are far greater than simply dollars lost. The underlying point: Burdensome regulations prevent people from having jobs.
One article from Adam Ozimek at Forbes points out that burdensome occupational licensing doesn’t just stop entrepreneurs from being able to open their own business, but actually keeps the poor from accessing low- and middle-income jobs that could actually get people out of poverty.
“…the removal of regulations to help low income people “climb the economic ladder” do not all operate through the pathway of entrepreneurship. And occupational licensing in particular is an example where entrepreneurship is not the only pathway that is blocked.
For evidence that many occupational licenses are blocking jobs that would allow non-entrepreneurial employees to climb up the wage/marginal productivity ladder, consider the Institute for Justice’s excellent report on occupational licensing.
The top 10 worst ranked jobs in terms of average licensing burden are as follows:
1. Preschool teacher
2. Athletic trainer
3. Earth driller
6. School bus driver
7. HVAC Contractor
8. Skin Care Specialist
9. Pest Control Applicator
10. Bus Driver
None of these jobs necessarily require any entrepreneurship, and they could all mean working for someone else rather than starting a company. Indeed, for some like cosmetologist or school bus driver working for someone else is probably going to be more common than self-employment under any regulatory regime.
Another important example where there are significant licensing and regulatory barriers are in the health field. While there is clearly an economic case for some regulation here, there are lots of clear instances where laws are used to artificially and unnecessarily increase the demand for higher skilled jobs at the cost of lower skilled jobs. These regulations favor doctors over nurses and dentists over dental hygienists. Again these positions do not require entrepreneurship, and would be within the reach of many low income individuals.”
Ozimek also cites a study by Enrico Moretti that found that an increase in trade jobs has a positive impact on local economies and creates 1.6 jobs in the non-trade sector for every one manufacturing job in a city. With increased workers you have an increased demand for goods and services which also has a positive impact on a local economy, creating 2.4 jobs in the goods and services sector for every one skilled trade sector job.
So getting rid of burdensome occupational licensing laws creates opportunities for entrepreneurs to pursue the American Dream, but also allows the poor to access jobs that not only improve their lives but also their communities. Sounds like a win-win.