In louisiana, it takes $1,485 and roughly 2,190 days to become an interior designer. In Washington, it takes $319 and 373 days to become a cosmetologist. The District of Columbia requires $740 to become an auctioneer, and a college degree to watch children for someone else. (Having and watching your own children continues to be an unlicensed affair.) In Kansas, you have to cough up $200 to work as a funeral attendant. And Maine requires $235 and 1,095 days to become a travel guide. Want to move states? That could mean you have to relicense, as if, say, cutting hair is materially different in Massachusetts than it is in New York.
This is absurd, and not just to me. Last week, New Hampshire Governor Chris Sununu announced that he would seek to “fully remove 34 different outdated licenses from state government” and eliminate “14 underutilized regulatory boards.” He also said that he would seek to make New Hampshire the next state to adopt universal recognition: “If you have a substantially similar license and are in good standing in another state, there’s no reason you shouldn’t have a license on Day One in New Hampshire.” He joins a number of governors in embracing universal recognition but is going one step further by pushing to fully delicense certain professions.
The usual argument in favor of strict and pervasive licensing is that the system helps ensure high standards for consumer welfare. Of course we can all think of several professions where some form of licensing makes sense: doctors and nurses, operators of dangerous machinery, handlers of hazardous materials. But the assumption that barriers to entry, no matter their form, will necessarily increase the quality of services provided is flawed.
The Institute for Justice looked at state licensing requirements for 102 low-income occupations across the country and found that 88 percent of those professions were unlicensed in at least one state, suggesting that the system is fairly arbitrary. It also found that a high licensing burden does not mean a high-risk occupation: “Workers in 71 occupations, including all the barbering and beauty occupations we study, face greater average burdens than entry-level emergency medical technicians.”
Nor does licensing necessarily translate to high standards for health and safety. A report by the Obama White House in 2015 concluded that “most research does not find that licensing improves quality or public health and safety” and that “stricter licensing was associated with quality improvements in only 2 out of the 12 studies reviewed.”
So the benefits of excessive licensing are unsubstantiated, theoretical, or minimal. But the drawbacks? Those are very real for workers and consumers alike.
Certifications and educational requirements come at a literal cost, both in the form of direct payments for the license or test fees and in the forgone wages during years of college or training. These costs shape the demographics of professional life. The composition of licensed occupations is significantly weighted toward those with a college degree. Many people are not fighting their way through a torrent of regulations; they’re simply giving up. One study of immigrant workers found that additional training significantly reduces the number of Vietnamese manicurists. (An average county could expect a 17.6 percent decline in Vietnamese manicurists per capita for every 100 extra hours of required training).
Onerous licensing costs don’t fall just on the workers who have to deal with the requirements but on us all in the form of higher prices and declining interstate migration. When people realize that moving states, even for a better job, means recertifying themselves for a profession they’ve already been practicing for years, they may decide to stay put in a suboptimal location. The 2015 White House analysis found that interstate-migration rates for workers in the most licensed occupations are significantly lower than those in the least licensed occupations. For within-state moves, the difference between licensed and non-licensed professions was much smaller.
Another study, published by the Federal Reserve Bank of Minneapolis, indicated that licensing does raise wages but reduces employment. Important to note is that—at least in the model proposed by the economists—the increased wages don’t fully compensate workers for licensing costs.
So why are licensing rules so pervasive? A recent American Economic Association working paper looked at what caused states to implement such requirements from 1870 to 2020 and found that trade associations played a key role: “We find that the formation of [state-level professional associations], which facilitate political organization, increases the probability of regulation by approximately 15 percentage points within the first five years after their establishment.”
Once these regulations are put in place, trade associations for the professionals who already paid the cover charge want to keep them in place. They want to keep the bar to entry high, because fewer newcomers means less competition means higher wages for their members. Even when some kind of bar makes sense—as with medicine—professional associations may shape requirements around benefits for their members rather than the public interest. The American Medical Association has lobbied against allowing nurse practitioners to expand their duties, and the Niskanen Center’s Robert Orr told me that “whenever states consider legislation to recognize residency training completed in other countries with comparably advanced medical systems, groups lobbying on behalf of physicians come out in force to ensure that this legislation never makes it into law.”
Or take a look at the American Society of Landscape Architects’ website, which implores members to fight against attacks on licensing. It argues that these rules are necessary to prevent “physical injury; property damage; and financial ruin.” The organization does not cite any research in support of this claim or at any point explain why in New Hampshire, for instance, a bachelor’s degree in environmental science, geography, engineering, architecture, or garden design, among others, qualifies you for a career in landscape architecture. These degrees are not interchangeable. If a four-year degree is more than a barrier to entry, one would expect significant overlap in the required coursework.
Occupational licensing springs from a permission-slip mentality that has infected American political institutions of all sorts. Permission slips to braid hair, permission slips to build affordable housing, permission slips to put solar panels on your roof … a country full of adults raising our hands waiting for someone to let us use the bathroom!
Although pro-licensing forces would have you believe that we must choose between permission-slip governance and peril, this is a false choice. The question is not whether a particular industry poses risks but what kind and how they can best be reduced. Our current licensing regime has not rid American society of risk; heavily licensed industries continue to present safety issues. Instead it has exacerbated labor shortages in crucial industries, encouraged artificially high prices, and created unreasonable barriers to employment and mobility.
I don’t need government workers to ensure that a restaurant is aesthetically pleasing by licensing interior designers; I need them to certify that the food is safe by regularly inspecting establishments. I don’t need the government to decide who’s qualified to work as a locksmith; I can ask my neighbors or check Yelp for advice. And although a test may be appropriate to guarantee that someone can operate a forklift, a college degree most certainly isn’t.
None of this amounts to an argument against government. Permission-slip governance reflects not the government’s strength but its weakness. A strong government well staffed with experts would write clear regulations and enforce them. The government we actually have imposes permission-slip requirements pushed by interest groups and industry, then relies on consumers to pursue private legal remedies if anything goes wrong. This is a legacy of Republican attacks on Big Government, which not only constrained the size of the state but diminished its efficacy. Those attacks did not really limit government intrusion, however, because people still want protection against health and safety risks. When the government can’t provide that well and quickly, it provides that poorly and slowly. Rethinking occupational licensing is a start, but the project of building effective government requires more than deregulation.