The Corner

Economy & Business

Occupational Licensing Laws Benefit Licensees

The Department of Labor seems to have just discovered that when you restrict the supply of something the price of that thing tends to go up. Case in point: The special interests who push for occupational-licensing laws profit financially from their implementation.

The Wall Street Journal reports:

Overall, the median worker with a certificate or license earned just over $1,000 a week, compared with a little under $800 for those without in 2015. These higher wages partially reflect that many occupations with licenses include very high-earning medical and professional specialists. But that’s not the whole story.

Among workers without a high-school diploma, those without an occupational license (or certificate) typically earn $108 a week less than those with a credential. The evidence suggests the certificates give a noticeable earnings boost. Someone with just a high-school degree and an occupational certificate tends to earn slightly more than someone with an associate degree but no certificate.

And imagine that; there is higher unemployment for those workers who are artificially excluded from an occupation.

The Journal concludes:

The fact that workers do well with licenses and certificates doesn’t necessarily undermine the argument against them. One reason these workers might enjoy a wage and job premium is because they’ve artificially restricted competition in their fields. It’s one thing when a thoracic surgeon must have an active license, but it’s another when an interior designer must have one. The public-safety risks of botched surgery are greater than the public safety risk of clashing prints (though interior designers say unregulated design could also lead to hospital deaths).

No kidding.

Unfortunately, occupational licensing has grown significantly since the 1950s, when roughly one out of every 20 workers was required to obtain a government license. Economists Morris Kleiner and Alan Krueger estimate that an astounding one out of every three U.S. workers needs government permission before they are legally allowed to work today. Many of these occupations have traditionally provided low-income Americans with a path to self-sufficiency and upward mobility. By erecting barriers to entry to these occupations, we erect barriers to entry to achieving the American dream.

If you want to see how aggressive those with licensing can be when their government-granted monopoly is at stake, visit the Institute for Justice’s website and look at all the victims they have been defending against these special interests.

I encountered this behavior after I wrote this piece for Creators on contact lenses, prescriptions, the problem with the current system, and the interest groups attempts to make it worse. My mailbox filled up with e-mails from angry doctors telling be about the great dangers of freeing customers from all the current limitations to buy their contact lenses where they wanted (and to shop for the best prices) that are imposed on them by the government. I also received a lot of e-mails from consumers agreeing that the current system should be made better, not worse — as a bill by Louisiana senator Bill Cassidy (R.), the Contact Lens Consumer Health Protection Act of 2016, is trying to do. I love how they always present their efforts to make a service less accessible for consumers and more expensive a “Consumer Health Protection” effort.

I also received e-mails from people pointing out the work by innovators — such as this one — to improving consumers’ lives while watching out for their safety. I will file this in “the benefits of permissionless employment” category.

If you want to know how ridiculous some of the occupational-licensing laws are you can read an article I wrote for Reason magazine a few years ago called “Free the Horse Masseuses!” You can also read this and find out why bureaucrats think it is important that the people who rinse your hair at the hair salon, groom your cat, or sell you flowers be licensed. And this is a good story about how CrossFit won an anti-licensing victory against the District of Columbia.

Finally, I hope that in the process of collecting all the data, the Labor Department will learn a little about how stupid labor rules are hurting workers, employers, and the economy. It would be a timely lesson at the time when the department is pushing some ludicrous regulations to reform for the worst overtime pay.

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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