Tuesday, March 28, 2017

New FTC Task Force Will Focus on Occupational Licensing

The Acting Chair of the Federal Trade Commission (FTC), Maureen Ohlhausen, says that occupational licenses are a “particularly egregious example of this erosion in economic liberty” and she recently implemented a task force at the Commission to help reduce the burden imposed by occupational licenses.
In a speech at the George Mason Law Review’s 20th Annual Antitrust Symposium, FTC Acting Chair Ohlhausen discussed how unnecessary occupational licenses can have a negative effect on consumers:
The public safety and health rationale for regulating many of those occupations ranges from dubious to ridiculous. Consumers can, and do, easily evaluate the quality of interior designers, make-up artists, hair-braiders, and others. I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows. Market dynamics will naturally weed out those who provide a poor service, without danger to the public. For many other occupations, the costs of added regulation limit the number of providers and drive up prices. These costs often dwarf any public health or safety need and may actually harm consumers by limiting their access to beneficial services.  
In response to the proliferation of unnecessary occupational licenses that has occurred throughout the United States, Acting Chair Ohlhausen created the Economic Liberty Task Force with a particular focus on occupational licensing regulations. The Task Force will work with Governors and state and local leaders to analyze how such regulations impact competition and consumer choice.
In a July 2015 blog, I specifically discussed how Maryland’s occupational licensing regime is harming poor people in two ways. First, the licenses restrict labor competition, harming poor entrepreneurs who cannot afford the mandated training and licensing fees. Second, the reduction in labor competition increases prices that disproportionately harm the poorest consumers. Of course, occupational licensing harms all consumers with higher prices and lower productivity because the barriers to entry created by licenses discourage competition from outside entrepreneurs.
Moreover, the Obama Administration published a July 2015 report entitled “Occupational Licensing: A Framework for Policymakers” which said that “by one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars.”
Thank you to FTC Acting Chair Maureen Ohlhausen for creating the Economic Liberty Task Force. Hopefully, Maryland and other states will work with the Task Force to reduce the overall burden of occupational licensing.