Licenses to work hurt the poorest, August 5

Published on Monday, 4 August 2014 22:11 - Written by

The justification usually given for government regulations is safety, and we fully acknowledge many of these are vital — food inspection rules, for example, and licensing requirements for medical personnel.

But seriously, how dangerous to the public is an unlicensed auctioneer?

That’s why we are encouraged by Attorney General Greg Abbott’s plan to reform many of the state’s licensing laws, should he be elected governor in November.

“There are currently 150 business activities that currently require a state-issued license before they can be legally performed in Texas,” Abbott’s campaign said in a release on Friday. “Some of these are necessary for the health and safety of our citizens, like licensing medical doctors. But many are unnecessary or overly burdensome. For example, why do we require a license to be an interior designer? Or a salvage vehicle dealer? Or a ‘shampoo apprentice’?”

In fact, occupational licensing acts as a barrier to employment and entrepreneurship, according to a 2012 study by the Institute for Justice, a Washington policy group.

“An ‘occupational license’ is, put simply, government permission to work in a particular field,” the study says. “To earn the license, an aspiring worker must clear various hurdles, such as earning a certain amount of education or training or passing an exam. In the 1950s, only one in 20 U.S. workers needed the government’s permission to pursue their chosen occupation. Today, that figure stands at almost one in three.”

They studied 102 “low income” occupations, excluding professions such as physician and school teacher.

“Most of the 102 occupations are practiced somewhere without government permission and apparently without widespread harm,” it reads. “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 interior designer, shampooer, florist, home entertainment installer and funeral attendant.”

And the licensing rules vary greatly.

“Licensure burdens often vary considerably across states, calling into question the need for severe burdens,” the study says. “For instance, while 10 states require four months or more of training for manicurists, Alaska demands only about three days and Iowa about nine days.”

A quick scan of the news reveals no widespread nail-related fatalities in either state.

In Texas, 32 low-income occupations require licenses; they average 326 days of required education and experience, and an annual cost of $304.

The study warns that more and more trade groups are lobbying state legislatures to make new and stronger licensing requirements. But it’s not to protect consumers; it’s to protect the existing workers from competition.

There are plenty of alternatives to licensing for occupations such as florist and manicurist.

“For example, some of the ‘signaling’ benefits associated with licensing can be realized without the government restricting entry into occupations,” the study says.

Automobile shops, for example, can seek to get their mechanics “ASE-certified” to appeal to customers. That’s handled by the National Institute for Automotive Service Excellence,” not the government.

Abbott is on the right track in pledging to reform occupational licensing.