Abolish Occupational Licensing (Part 1)

in economics •  2 years ago 

Originally posted on Quora May 12, 2023

EMTs hold lives in their hands, yet 73 other occupations have greater average licensure burdens: barbers and cosmetologists, home entertainment installers, interior designers, log scalers, manicurists and numerous contractor designations … while the average cosmetologist must complete 386 days of training, the average EMT must complete a mere 34. Even the average tree trimmer must complete more than 16 times the amount of education and experience.
Source: The Atlantic, License To Work

In the USSA, there doesn't seem to be any gig that you can do without needing a team of bureaucrats to sign off on it, however trivial it may be in the grand scheme of 'public safety.' For instance, to install home entertainment systems in Connecticut you have to earn a high school diploma, pay a $185 application fee, pass a test, and work as an apprentice for one year. To legally sell flowers in Louisiana, one has to pay a $189 application fee and pass a florist exam. All 50 states require a license to become a barber. On average, a prospective barber must pay $154 in fees, sit out a year for education, and pass two exams just to legally cut other peoples' hair. Even something as mundane as cutting grass for pay, something teenagers often do for recreational spending, requires a business license in a growing number of cities. The absurdity of occupational licensing laws knows no bounds. As I have reported in previous posts, people have been threatened with fines and sometimes prison for offering dietary advice without the government's permission, teaching makeup without the government's permission, critiquing traffic lights without the government's permission, playing music in a bar without the government's permission, selling teeth whitening products without the government's permission, and selling home cooked meals to neighbors without the government's permission. At this point, a list of jobs you're allowed to do without the government's permission would be much shorter than a list of jobs you need their permission to do. State and local governments, in conjunction with industry licensing boards, are making an ever growing number of services illegal without a government shakedown. This creates barriers for innovation, growth, and self-employment opportunities for the working class. A radical measure is needed to end this insanity: abolish occupational licensing, along with the state licensing boards that implement them and the industry lobbyists that control them. It won't be pretty, initially, but over time we will see how consumers can join together to regulate the quality of the services they provide. The first conception may be rating systems specific to certain kinds of services, and this may evolve into private credentialing over time. Eliminating the rigid top down structure of licensing boards would open up multiple avenues for keeping proprietors honest and competent without creating burdensome hurdles for honest and competent people trying to become proprietors.

Occupational Licensing Does Not Increase Quality of Service

IJ conducted a regression analysis comparing fifteen years of yelp reviews years for six different occupations across nine state border pairings wherein the occupation was practiced within a narrow region within a state border with either less burdensome or more burdensome state licensing regimes for two occupations (barbers and cosmetologists) or in the case of four occupations (interior designer, locksmith, manicurist and tree trimmer) no license requirement compared to a license requirement across the border. In five of the nine border comparisons practitioners in unlicensed states or less burdensome licensing regimes received higher yelp reviews than those in licensed states or under more burdensome licensing regimes. The converse was true for four of the state border comparisons. Overall, no statistically significant difference was found in quality of service between states that required a license for four of the occupations and states that did not require a license. For two of the occupations that are universally licensed (barber and cosmetologist) New York, which has a less burdensome license regime, was found to have practitioners with statistically significantly better reviews than practitioners directly across the state border in New Jersey and Connecticut with more burdensome licensing regimes.

Prior to this regression analysis, four previous studies were conducted examining the relationship between licensing burdens and quality of service using consumer ratings dating as far back as the 1970s. Three of the four studies found that licensing has no effect on quality of service for general services such as florist, tour guide, home improvement, barber, cosmetologist, manicurists and massage therapists. The fourth study found that licensing burdens had an inverse relationship with consumer ratings for four occupations: barbers, cosmetologists, manicurists, and massage therapists.

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