Occupational licensing laws hurt prosperity

Occupational licensing laws, aside from their longobvious bureaucratic nit-picking, may hinder economic mobility in our nation.

That news comes from a new study by the Archbridge Institute.

It is becoming increasingly obvious to people across the political spectrum that occupational licensing laws can do more harm than good.

In recent years, organizations and individuals as diverse as the Obama White House, Trump administration Labor Secretary Alexander Acosta, the libertarian Institute for Justice and California’s Little Hoover Commission have called for reform of occupational licensing laws.

Often promoted on the grounds that government licensing of certain occupations is necessary to ensure the safety of the public or the professionalization of certain career fields, licensing laws often do little more than arbitrarily deny people an opportunity to make a living and raise costs to consumers.

Shedding further light on its negative effects is a study Archbridge called “Too Much License?,” which assesses the effect of increased occupational licensing on economic mobility and income inequality throughout the country.

It is worth noting that about a quarter of American workers currently require a government license to work, up from about 5 percent in the 1950s.

Contrary to expectations, there is little consistency from state to state with regard to which occupations require licensure, and even among states licensing the same occupation, requirements can vary considerable.

The Archbridge study notes that from 1993-2012, states on average added licensing requirements to 31 new lowincome professions.

Precisely how many varied greatly, with Kentucky licensing only 15 new low-income occupations in that period compared to 41 in neighboring states. California added licensing requirements to 49 low-income jobs, compared to 39 in Nevada.

The study looked at the relationship between growth in licensing at the state level and economic mobility at the county level.

While unable to establish a causal relationship, the researchers found that “growth in state licensing is associated with a 1.7 percent to 6.7 percent reduction in absolute mobility at the county level.” The researchers also found that by shrinking “the pool of potential laborers by creating barriers to entry” and reducing economic mobility, occupational licensing also increases income inequality by 3.9 percent to 15.4 percent.

These findings led the researchers to conclude “licensing may be creating barriers to opportunity that prevent the least fortunate Americans from achieving the American dream of prosperity.”

The results of the study underscore the need to reform occupational licensing laws in large part to help poor Americans get work and afford the vast array of licensed services.

As noted by the Little Hoover Commission, occupational licensing laws punish the poorest among us twice: “first by imposing significant costs on them should they try to enter a licensed occupation and second by pricing the services provided by licensed professionals out of reach.”

Occupational licensing laws have become just another way for special interest to use the force of government to benefit the few. States should eliminate licensing laws that are unnecessary and streamline the rest.

— Orange County Register, Digital First Media

Although promoted as protecting the public, licensing laws for certain occupations do little more than arbitrarily deny people an opportunity to make a living and raise costs to consumers.