The Institute for Justice has published an important new study on the economic impact of licensing laws.
As a new report issued today by the Institute for Justice discusses, more and more Americans now need the government’s permission before they can pursue the occupation of their choice. The IJ report, “License to Work: A National Study of Burdens from Occupational Licensing,” shows that for lower-income Americans, these government-imposed “occupational licensing” hurdles are not only widespread, but often unreasonably high. License to Work details licensing requirements for 102 low- and moderate-income occupations in all 50 states and D.C. It is the first national study of licensing to focus on lower-income occupations and to measure the burdens licensing imposes on aspiring workers . . .
All of the 102 occupations studied in License to Work are licensed in at least one state. On average, these government-mandated licenses force aspiring workers to spend nine months in education or training, pass one exam and pay more than $200 in fees. One third of the licenses take more than one year to earn. At least one exam is required for 79 of the occupations.
“These licensing laws force people to spend a lot of time and effort earning a license instead of earning a living,” said Dr. Dick Carpenter, director of strategic research at the Institute for Justice and report co-author. “They make it harder for people to find jobs and to build new businesses that create jobs.”
Data show that those practicing the 102 occupations studied are not only more likely to be low-income, but also to be minority and to have less education, likely making licensing hurdles even harder to overcome. In addition, about half the 102 occupations offer the possibility of entrepreneurship, suggesting these laws affect both job attainment and creation.
Licensing requirements are usually justified under concerns for public safety. But that’s usually just a canard.
. . . research to date provides little evidence that licensing protects public health and safety or improves products and services. Instead, it increases consumer costs and reduces opportunities for workers.
License to Work provides additional reasons to doubt that many licensing regimes are needed. First, most of the 102 occupations are practiced somewhere without government permission and apparently without widespread harm: Only 15 are licensed in 40 states or more, and on average, the 102 occupations are licensed in just 22 states—fewer than half. This includes a number of occupations with no self-evident rationale for licensure, such as shampooer, florist, home entertainment installer and funeral attendant.
Second, licensure burdens often vary considerably across states, calling into question the need for severe burdens. For instance, although 10 states require four months or more of training for manicurists, Alaska demands only about three days and Iowa about nine days. Such disparities are prevalent throughout the occupations studied.
Finally, the difficulty of entering an occupation often has little to do with the health or safety risk it poses. Of the 102 occupations studied, the most difficult to enter is interior designer, a harmless occupation licensed in only three states and D.C. By contrast, EMTs hold lives in their hands, yet 66 other occupations face greater average licensure burdens, including barbers and cosmetologists, manicurists and a host of contractor designations.
Idea for some econ grad student: Do a study to determine the number of jobs the Institute for Justice has created over the years by suing, usually successfully, to overturn this protectionist nonsense.