Arnold Kling  

Occupational Licensing

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Timothy Taylor summarizes some recent and not-so-recent research showing the surprising extent of occupational licensing.


My own guess is that the politics of passing state-level occupational licensing laws is driven by three factors: 1) lobbying by those who already work in the occupation to limit competition; 2) passing laws in response to wildly unrepresentative anecdotes of terrible or dangerous service; and 3) the tendency when setting standards to feel like more is better. But in a U.S. economy which is hurting for job creation, especially jobs for low-income workers, states should be seriously rethinking many of their occupational licensing rules. Many would be better-replaced with lower standards, certification rather than licenses, or even no licenses at all.

One approach I would like to see is one in which being in licensed in one state means that you are licensed in every state. State-specific licensing requirements strike me as violating the spirit, if not the letter, of the Constitution's provisions protecting interstate commerce.


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COMMENTS (8 to date)
SheetWise writes:
"One approach I would like to see is one in which being licensed in one state means that you are licensed in every state.

That approach might create an incentive for Oklahoma to licenses ship captains.

I would prefer state laws simply required full disclosure. Perhaps I would have to sign a form indicating that I am fully aware that my "interior designer" is not licensed by the state, and swear under penalty of perjury that I am comfortable with that.

Bill writes:

I always prefered the idea of replacing all licensure with certification. There are no barriers to entry, and consumers can pick from certified or non-certified service providers. Certification better serves a market function in a similar way as does brand names.

In a related note, see this past week's WSJ op-ed Do Barbers Really Need a License?

Becky Hargrove writes:

Valuable post, and comments.

NW writes:

I've recently run into this problem. I have a Master's degree in
Exercise Physiology, but it's difficult to find work in the field
unless I want to be a personal trainer (I don't, and you don't even
need a degree for that). In retrospect, I wish I had gone to school to
be a physical therapy assistant. It would be much easier to find a job
that way. However, it's totally illegal!!! If I want to be a PTA then
I have to go back to school for 2 more years and add another $11,000
to my student loans bills in addition to taking a state licensing
exam. That doesn't sound very appealing to me as I just got done doing
that in getting my Masters. It's ridiculous because I would have no
problem learning how to be a PTA on the job. Instead, I have to suffer
from poorer labor mobility despite a lack of evidence that these laws
help anyone but suppliers.

The Swiss writes:
State-specific licensing requirements strike me as violating the spirit, if not the letter, of the Constitution's provisions protecting interstate commerce.

Which provisions do you have in mind? The commerce clause is an affirmative grant of authority to Congress, not a protection of interstate commerce. It says "[Congress shall have the power to] regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."

You might be thinking of the "dormant commerce clause," but it is a judicial invention (albeit one of long vintage). The constitutional argument against silly licensing laws is weak; moreso if it it based on the "spirit" of the law. I'd prefer to be governed by laws than spirits.

Daniel Klein writes:

Occupational licensing is bad.

What I find interesting is how several folks who lean left, such as Tim Taylor, Matt Yglesias, and Alan Krueger have chimed in in the liberalization direction.

I do not think that the case against occupational licensing is particularly stronger than the case against banned-till-permitted in new drugs ("pre-market approval," in Newspeak)-- especially in a world where all sensitive drugs remain subject to prescription requirements.

On that assessment, the 64 thousand dollar question is: Why are a few social democrats willing to lean toward liberalization on occupational licensing, but none are willing to do so on banned-till-permitted?

I think another part of the need to restrict entry is to justify one's own investment, even more than to restrict competition. The more someone had to work to enter a field, the more they will insist that it is necessary that everyone else who wants to enter the field also makes a similar investment.

Also on your point about the Commerce Clause - wouldn't the Full Faith and Credit clause be more relevant for requiring that states recognize the licenses of other states?

Bill writes:

Also of note, in relation to people's comments so far regarding the Commerce Clause, see the link here for an excellent analysis of the original meaning of the Commerce Clause as intended by the Founders. If this definition of 'commerce' had held true until today, the last one hundred years of American history would have looked alot different...

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