Philanthropy

Occupational Licenses are Killing Opportunity


One reason I keep returning to news about occupational licensing is that licenses are, far too often, used to prevent people who want to work and start their own businesses but are blocked from entering the labor force because a bureaucrat says they don’t have the appropriate credentials.

Occupational licensing is particularly irritating because it is frequently used by people who have jobs to block competitors from entering a given market.

I’ve touched on occupational licensing in several articles, including how occupational license barriers were so ludicrous that the Obama White House issued a report about why reform is necessary.

I’ve also written about a piece by Weekly Standard managing editor Eric Felten about occupational license reform in Arizona. Finally, this post discusses the related issue of “certificates of necessity” which are used to keep moving companies out of states.

And now there are two recent stories in the battle over occupational license reform.

The first is that the Federal Trade Commission has entered the debate with both regulatory feet and is actively pursuing ways to reduce or eliminate occupational licenses.

They’ve set up an Economic Liberty Task Force, and later this month are holding a conference about ways to reduce barriers that prevent people with a valid license in one state (such as a nurse) from practicing in another state. This is an issue of particular concern for spouses of service members, who find they can’t get a job when their wife or husband moves from one state to another because one state refuses to accept another state’s licenses.

“Licensing rules impose costs on all consumers,” according to this press release by Karen A. Goldman and Katie Ambrogi of the FTC’s Office of Policy Planning, “not just the people who work in licensed occupations, because they restrict the supply of qualified workers even in the face of unmet demand.”

I think the most informative account of why the Federal Trade Commission was involved in this issue is  Forbes.com columnist Jared Meyer had in April with acting FTC Chairman Maureen Ohlhausen.

Ohlhausen noted that the FTC has long had a power as a bully pulpit to speak out against regulatory abuses by states. But in a 2015 decision, North Carolina Dental v. FTC, the Supreme Court, by a 6-3 vote, said there were limits to the time-honored rule called the “state action doctrine” which says that states are immune from federal antitrust regulations.

The case involved a North Carolina board which tried to prevent people from whitening teeth on the grounds that they were illegally practicing dentistry. (A Carolina Journal piece from 2015 provides background here.)

The Supreme Court said that there were two tests that state regulators had to pass if they want to keep their immunity from the feds: the state had to have a “clearly articulated and affirmatively expressed” view that regulatory control was necessary (such as a law) and the regulatory board had to be “actively supervised” by the state.

Since the North Carolina dentists were practicing self-dealing and the state legislature had never considered the issue of illicit teeth whiteners, the Supreme Court ruled the board was under control of the FTC.

You could argue that North Carolina Dental was a blow to federalism. Then you’d be siding with the three dissenters, Justices Alito, Scalia, and Thomas. But I agree with Ohlhausen that the Supreme Court decided correctly and the FTC’s victory “has created a resurgence of interest in occupational licensing reform at the state level.”

I looked at the FTC website to find out the most dubious license they had complained about. The clear winner has to be Nebraska, which has a bill repealing a requirement that potato shippers had to be licensed.

Well, we wouldn’t want our potatoes shipped by unlicensed amateurs, now, would we? You might open a box of spuds and find a sweet potato, or a brick, or a volume by Naomi Klein. One wonders if anyone outside the industry has demanded that fully qualified professionals ship their potatoes.

Reason reporter Eric Boehm explained the idiocies of occupational licensing in this post about Sherry Japhet, who is a “freelance makeup artist” in Boise, Idaho. She’s part of a profession called “stylists by demand…where a smart phone app can bring a makeup artist to your door, just like if you were ordering an Uber.”

One day Japhet got a call from Lori Otter, First Lady of Idaho, requesting her services.

Japhet explained that she had to decline because Otter’s husband, Gov. Butch Otter, had vetoed a bill that said would let makeup artists earn a living without working in a licensed hair salon. Japhet isn’t interested in styling hair, and Gov. Otter’s veto means her trade is illegal in Idaho.

According to the Institute for Justice[1], Idaho requires cosmetologists to have 467 days of training, while barbers have to have 630 days. A bill that would create a new license for makeup artists—and require 250 hours of training—won’t be considered by the Idaho state legislature until 2018.

Japhet’s story, Boehm writes, “raises questions about why cosmetologists and makeup artists are required to be licensed at all.”

Boehm’s question is a good one, and reminds us that there are a whole slew of professions where occupational licenses stop people who want to work but can’t because of state bureaucrats.


(Hat tip: J.D. Tuccille, Reason)

[1] I once edited a report for the Institute for Justice.

Martin Morse Wooster

Wooster is senior fellow at the Capital Research Center. He is the author of three books: Angry Classrooms, Vacant Minds (Pacific Research Institute, 1994), The Great Philanthropists and the Problem of ‘Donor Intent’ (Capital Research…
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