In our ever-specializing world, we are confronted by a dizzying array of service providers who are eager to help us out (for a fee). We expect some professionals, like doctors, dentists and accountants, to be highly educated, trained and licensed. Others, like the teen who cuts the lawn, need no training or experience. But, what about all the providers — the bus driver, bill collector, dental assistant — in between these two extremes? According to a recent report by the Institute of Justice, the 50 states (and D.C.) have decided to require, in total, licenses for 102 different occupations. And, the number has been rising for generations (see chart).
Licensure Makes Sense in Some Cases
Few would argue that licensure is always a bad idea. Where there is a substantial risk of public harm, a clear need for training and experience, and evidence of real damage being done to the public, the state should require licenses. This is especially important where it is difficult for consumers to obtain and assess important information when making decisions. The medical field (doctors, dentists), sophisticated finance (accountants, auditors), and the legal field are obvious candidates for licensure. Every state requires EMTs, school bus drivers, and preschool teachers (except for Utah) to get a license. Occupations like these pose real risks to the public — a license process seems like a good idea.
Many Licensure Rules are Unnecessary and Arbitrary
State legislatures have taken the well-meaning impulse behind licensure and extended it far beyond what is necessary. Here’s a partial list of some questionable decisions: home entertainment (license required only in Connecticut), conveyor operator (only Rhode Island), funeral attendant (3 states), interior designer (4 states), travel agency (7 states), bartender (13 states), taxidermist (28 states), auctioneer (30 states), makeup artist (41 states), manicurist (50 states) and barber (51 states, including D.C.). You can see other examples here. On their face, these occupations don’t appear to raise the types of harm that licensure purports to solve.
The picture is worse when you consider the variability between states. For example, only 14 states require locksmiths to be licensed. Most of the locksmith licensure procedures are easy to meet, but New Jersey requires more than 2 years of education and training and the passage of an exam. Only two states license dieticians, but those states require more than 2 years of education and experience.
Even where most states license the same occupations, the differences are stark. For security alarm installers (licensed in 37 states), Connecticut requires 6 years of experience, while neighboring New York requires only 18 days and many states (including another close-by state, New Hamphsire) have no license requirement. Similarly, of the 48 states that license Landscape Contractors, 4 states require four years of experience; 40 others require none at all. This difference, and the apparent lack of public harm that occurs in those states with the more lenient rules, undermines the case for licensure in general.
Licensure is Costly and, in Many Cases, Brings Little Public Benefit
Licensure is expensive and takes time. In most cases, an aspiring entrepreneur needs to pay a fee, which can range as high as $2370 (Travel Guide, Wyoming) and an astounding $3000 for a Vegetation Pesticide Applicator in New York. Midwives in many states pay more than $1000 for the privilege. The education and training requirements can be absurdly high — in Alabama, barbers must clock 1000 hours of education to be licensed; in D.C., a massage therapist has to put in 500 hours; in Rhode Island, a Shampooer has to work for 1500 hours; and in South Dakota, a Cosmetologist must toil for 2100 hours before getting a license.
All of this time and expense might be justified if there were significant benefits to public health and safety. An Obama Administration report concluded, however, that “most research does not find that licensing improves quality or public health and safety.” Instead, the only clear effects of licensing were to increase the wages of licensed workers and to raise prices for consumers. This makes intuitive sense, as the necessary impact of a license scheme is to restrict entrants to a field and thereby increase costs. These are not impacts to celebrate.
A Better Way
local, informal arrangements
should be encouraged and respected
The Shire starts from the simple premise that local, informal arrangements should be respected and encouraged. These decisions and ways of living reflect the collected experience and wisdom of real life. So, if confronted with a request to impose a license requirement, the first question a legislator should ask is whether there is a real, demonstrated need for the license requirement. What harms are allegedly occurring in the industry? Are they significant enough to require a law and the enforcement resources required to enforce that law? Would classes, an experience requirement, or a test help prevent the harms?
In making this assessment, a legislator should consider whether existing practices and laws already protect the public. Do third-party certification bodies already exist to set standards of behavior? Do bonding and insurance (which provide consumers with a means of redress if something goes wrong) exist for the field in question? Also, legislators should consider that every U.S. state already has a Deceptive Practices Act which provide a right for the State or individuals (or both) to sue people who commit fraud or misrepresent their services. Perhaps this is enough protection.
A legislator should also ask why a license is required at this time in a new field. Given the generations that have already passed without licensure, something significant should have changed to justify the imposition of a new requirement. Legislators should be skeptical of claims of changing circumstances. Licensure is often sought by groups of incumbents that are seeking to block new entrants into their field. Legislators should carefully consider claims of alleged risks in the industry are real and significant enough to justify the imposition of new restrictions.
It also seems relevant to consider the experience of other states. Perhaps the Louisiana legislature should have noticed that no other state licensed Florists before it decided to do so. Similarly, Rhode Island is the only state to require Conveyor Operators to obtain a license — this should have troubled legislators. Conversely, the 44 states who have licensed pharmacy technicians might cause the remaining states to consider a similar program.
Not every problem
requires a central solution
The hardest thing for people in power to understand is that not every problem requires a central solution; not every important issue needs oversight from a bureaucrat. We should want a society where families, civic institutions, churches, non-profits and neighborhoods, generally take responsibility for their own affairs without undue interference or complexity — legislators need to think carefully before they impose rules and regulations that stifle this ability. And, a state only has so many resources. States should direct their resources to areas of significant, unmanageable risk and leave the rest alone.
State legislatures should review their existing license regimes and repeal those rules that are not serving a public benefit or are just too burdensome. They should also consider all other options (and the motives of those seeking the new license laws) before they impose new license requirements.