New Study Shows Who’s Suffering from Occupational Licensing

Oct 25, 2017 by Payton Alexander

A new study highlighting the burden of occupational licensing in the United States was released last week by the Wisconsin Institute for Law and Liberty, showing the scale of the barriers that occupational licensing laws impose on workers and prospective workers across the nation.

Occupational licensing laws – which mandate hours of training, exams, and steep fees in order for prospective workers to be granted permission to work – vary considerably from state to state. According to the new research, states could increase employment in ten licensed professions, such as athletic training and cosmetology, by over 4 percent simply by reducing their licensing regimes to the level in Hawaii, the least-licensed state.

The states that imposed the highest fees, mandated the longest hours of training, and required the most exams, suffered lower rates of employment in the ten licensed professions examined in the study. Twenty-three states could even boost employment by 5 percent from the same reforms.

Unfortunately for job-seekers in Tennessee, Alabama, Nevada, Florida, and Wisconsin, licensing regulations in these states were found to be the most burdensome in the nation.

Occupational licensing restricts opportunity by unnecessarily locking productive workers out of occupations they are already qualified to perform, simply because they lack the required government permission slip. Instead of protecting the public, occupational licensing forces people to pay for the permission to work.

In many cases, these licensing regimes have little to no marginal impact on public safety as demonstrated by the fact that Hawaii isn’t showing a rash of negative consequences from being the least licensed state. Additionally, there are other less burdensome ways to ensure consumer safety    such as bonding and insurance, certifications, or inspections.

Despite these negative consequences, occupational licensing has exploded in recent decades. Whereas only one in twenty American workers required a license in order to practice their occupation in the 1950’s, nearly one in four do now. This staggering expansion of licensed professions hasn’t been in professions like law or medicine, but instead jobs such as horse massage therapy, milk sampling, and traditional African hair braiding.

In fact, some occupations require licenses that are not only unnecessary, but completely unrelated to the scope of practice originally targeted for regulation. In order to braid hair, practitioners in many states must obtain a cosmetology license – training for hundreds of hours to master subjects like shampooing hair, trimming beards, and cleaning scissors – even though hair braiding involves no such thing. Laughably, cosmetology licenses don’t require any kind of instruction on hair braiding at all.

In order to untangle the knot of unnecessary licensure, policymakers should pass reforms that provide a presumption of the right to practice a given profession under the law, placing the burden of proof squarely on the licensing boards to demonstrate the necessity of licensing.

Additionally, lawmakers should enshrine a scale of regulatory options in statute, requiring the government to determine the least restrictive framework for regulation necessary to protect the health and safety of the public, rather than imposing licensing regimes without a thought to potential alternatives.

Finally, lawmakers should clarify the scope of practice covered under existing licenses, so that professions not originally targeted for regulation – such as hair braiding – do not fall prey to overzealous crony licensing boards attempting to shut down competition in their industries.

Any of these reforms would increase opportunity and competition, allowing more Americans to improve their own lives by improving the lives of others in our market economy.