Occupational Licensing Reform: No Easy Task
Free market thinkers have talked for decades about the dangers of over-eager occupational licensing. In the last five years, presidents from both major political parties have talked about the need to reform occupational licensing. There is—seemingly—cross-partisan support for occupational licensing reform, and yet little seems to get done.
One reason why occupational licensing reform is going to be hard is that licensing is almost exclusively in the purview of the states. Hence, while Presidents Obama and Trump may both agree on the need for licensing reform, there is little that can be done at the national level, save for serving as cheerleaders for state efforts.
Some states—like with Nebraska’s Occupational Board Reform Act passed in 2018, or Arizona’s occupational licensing reciprocity act passed earlier this year—have attempted to make big changes in the status quo, but those successful efforts are rare in the fifty states, and the success of implementation of those laws is yet to be seen.
Government regulation of all types—and especially in the area of job licensing—seems to follow Newton’s First Law of Motion describing inertia: “a body in motion stays in motion, and a body at rest stays at rest.” Once states started licensing occupations—limiting who could and couldn’t get into a particular field of endeavor—they just kept going.
A review of over 1,000 occupational licensing-related bills introduced in legislatures around the country show nearly a third of them would have created new licensure, or expanded current recognitions in statute to licensed status.
Likewise, those who are licensed in particular occupations tend not to want any reduction in barriers made—they want to “stay at rest,” if you will, and not ease the burden for others to enter their occupational area. About of a quarter of the bills introduced around the country would have reduced existing barriers, but few made it out of their respective committees.
Most general licensing statutes refer back to a movement in the 1980s which suggested that government regulation of occupations should be limited to those times when the “health, safety and welfare” of the general public was at stake—and yet the definition of those terms, to cover any potential negative occurrence, has been taken broadly over the last three decades.
It won’t be easy, but occupational licensing reform is something we should continue to work for. We should know who is licensed, and why they are required to be licensed. We should ask questions about whether licensing works to the benefit of those who are served, or serves as economic protection for those who have the licenses by limiting competition.
The Institute for Justice says that “Economic liberty—the right to earn a living in the occupation of your choice without unnecessary government interference—is the heart of the American Dream.” If we still believe in that American Dream, we must be vigilante about reviewing—and sometimes eliminating– the barriers that government places in the paths of its citizens. That vigilance provides the “unbalanced force” that can change the inertia of regulation.