Occupational licensing is under increasing scrutiny. Groups as ideologically diverse as the Obama White House, the Trump Administration’s Federal Trade Commission, the Brookings Institution, the National Conference of State Legislators and the Institute for Justice, have criticized occupational licensing.
One of the biggest problems with licensing is regulatory capture. According to Vanderbilt University Law School Professor Rebecca Haw Allensworth 85 percent of the nation’s 1,790 state licensing boards are required by state statute to be comprised of a majority of currently-licensed professionals, active in the very profession their boards regulate. This means that those who write regulations and enforce licensing laws are the very same special interests that benefit from less competition.
Who will watch the watchmen?
The Institute for Justice’s model Occupational Rule Defense Act provides two solutions to the problem of regulatory capture. First, the Act provides an affirmative defense to workers who face fines and other enforcement penalties in both administrative and judicial hearings. If a worker shows that a regulation “substantially burdens” his or her pursuit of a lawful occupation, the board must then prove that its regulation is the “least restrictive regulation” and truly protects against a “present and recognizable harm to public health or safety.”
Secondly, the Act provides canons of interpretation for how board members and judges should interpret ambiguous, vague or only partially relevant statutes and administrative rules. Otherwise, when a regulation is unambiguous, these canons play no role. Technological innovations and niche service providers raise questions about how and when a board should enforce regulations that were often written decades beforehand.