On paper, the goal of occupational licensing requirements is to protect the consumers, but in reality these government mandates can cause more harm than good. Most positions that require an occupational license are those typically held by middle class Americans. During these difficult economic times, workers simply cannot afford the time and money required to obtain a government issued license.
Professor Alan B. Krueger, a Princeton economist and former advisor to President Obama, comes to a logical conclusion:
“Lower-income people suffer from licensing. It raises the costs of many services and prevents low-income people from getting into some professions.”
Mandated occupational licensing has been on the rise for over 60 years. In 1950 the regulation affected 5% of workers and in 1970s the number increased to 10%.
Today, 30% of all workers in the United States must have a license and the laborers required to obtain these licenses are probably not who you think. For example, the average cosmetologist spends 372 days in training to receive a license from the government and the average EMT trains for just 33 days. In fact, “across all states, interior designers, barbers, cosmetologists, and manicurists all face greater average licensing requirements than do EMTs.”
Numerous professions continue to be affected by negative occupational licensing. For example, superfluous government regulation is prominent in the hair braiding industry. Many states require hair braiders to obtain a hair styling or cosmetology license, although that is not their chosen profession. The Institute for Justice works diligently to award them, along with other Americans, economic liberty.
Cumbersome regulations are not just inconvenient, they are preventing economic recovery in the United States by hindering free markets. According to a study done by the Brooking Institute, consumers pay 15 percent more for services when an occupation is licensed.
There is an indication that the Obama Administration may propose licensing “reform” in its upcoming budget. “We would like all states to ask whether licensing requirements meet a cost-benefit test,” said Betsey Stevenson of the President’s Council of Economic Advisers.
While the President ponders the idea of possibly recommending studies and tests, Rep. Paul Ryan has already proposed concrete reforms. In the study, “Expanding Opportunity in America”, Ryan recommends the elimination of frivolous licensing requirements to create more opportunities for laborers and shrink costs for consumers.