Occupational Licensing: A National Issue

From California to the District of Columbia, occupational licensing is coming under increasingly close scrutiny. Brookings Institute recently criticized occupational licensing for damaging social mobility. Brookings discussed four harmful effects of occupational licensing:

  • Discouraging licensed workers from moving between states
  • A lifetime ban on former prisoners
  • Imposing up-front costs, with a disproportionate effect on those with less means
  • “Opportunity hoarding”, where those with resources and connections benefit from higher incomes by preventing others from competing

Earlier this month, the Institute for Justice’s Director of Strategic research Dick M. Carpenter II cited similar issues in his testimony before the Little Hoover Commission in California. (Carpenter’s testimony can be heard at 1:05:00 here.) According to Carpenter:

The result [of occupational licensing] is that upward mobility is harmed by keeping people out of jobs, by inhibiting cross state migration, by making it harder for people particularly minorities, those of lesser means and those of less education, to expand businesses that create jobs, and also by retarding innovations that individuals can use to differentiate themselves from competitors.”

Legislative reforms limiting occupational licensing are gaining traction across the country. New Jersey recently passed emergency legislation allowing the unlicensed shoveling of snow ahead of an impending snowstorm. In Nebraska a state senator introduced a bill to exempt hair braiders from the state’s cosmetology license which requires 2100 hours of training. The Arizona House Commerce Committee also recently approved a bill to end licensing requirements for several occupations including landscape architects and yoga instructors.

Earlier this month, IJ Attorney Robert Everett Johnson and IJ client Bill Main testified to the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights on the burdens created by occupational licensing. At the hearing, Sen. Al Franken said, “I think it’s clear that we have some unnecessary occupational licensing, and that that can harm workers and consumers in a number of ways.”

For more information on occupational licensing laws check out IJ’s national report License to Work which documented the requirements for 102 occupations across all 50 states and the District of Columbia.

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