Friday, August 07, 2015

White House Report on Occupational Licensing Hits the Mark

The White House released a July 2015 report entitled “Occupational Licensing: A Framework for Policymakers,” which explains how the impact of occupational licensing on consumers, job seekers, and the economy as a whole can be more costly than beneficial. An August 7 Washington Post editorial summarized the report and some of its findings:
“A startling one-quarter of all U.S. workers need a license to do their jobs, according to the White House report, a five-fold increase since the 1950s. Among those most affected by this situation are military families, who move frequently from state to state, only to find that a non-military spouse can no longer work without spending months qualifying for a new license. Licensing also inhibits many ex-offenders from rejoining the workforce because they lack the requisite clean police record. Overall, unlicensed workers earn 10 percent to 15 percent less than similarly skilled licensed workers, and licensing laws raise consumer prices, with no dis­cern­ible increase in the general quality of goods and services, according to research summarized in the report.”
The editorial says that while some occupational licenses help protect public safety and health, others can be particularly burdensome when applied to specific occupations in a protectionist manner, like florist licenses or funeral-attendant licenses. The editorial also considers how historic economists and various political ideologies have questioned the costs and benefits of restrictive occupational licensing:
“[T]he report’s authors stand on the shoulders of not only [Adam] Smith and [Milton] Friedman but also researchers at think tanks ranging from the libertarian Institute for Justice to the liberal Brookings Institution, who have previously documented the often contradictory and unjustifiable rules that require, say, scrap metal recyclers to get a license in one state but not in another — or oblige aspiring members of the same licensed trade to pay wildly varying fees and spend wildly varying amounts of time studying depending on where they live.”
On July 31, 2015, I wrote a blog entitled “Maryland’s Occupational Licensing Regime Hurts the Poor.” In it, I referred to the White House report in discussing how restricted competition under Maryland’s occupational licensing regime leads to increased prices and unemployment, which disproportionately burden poor Maryland residents.
As my blog, the White House report, and the Washington Post editorial conclude, eliminating discriminatory and protectionist occupational licenses would enhance consumer welfare and promote economic growth. This is an issue on which those with various political ideologies ought to agree.