Last week’s White House report on occupational licensing laws details some offers some disturbing information about how these laws restrict economic opportunity for entrepreneurs, and raise the cost of living for consumers. Some highlights:
- More than a quarter, and possibly a third, of all Americans need some form of government license to do their job. This ranges from the obvious—doctors, pharmacists, etc.—to the absurd, such as florists, interior designers, and funeral attendants, who probably shouldn’t be licensed at all.
- Getting a license can be very expensive and hard—“States range from Pennsylvania, where it takes an estimated average of 113 days (about four months) to fulfill the educational and experience requirements for the average licensed occupation examined, to Hawaii, where it takes 724 days (about two years).” Many licensing laws require a person to have a college degree to even take the exam. The costs of licensing fall disproportionately on groups who are already excluded in one way or another, particularly people with little formal schooling, and not enough money to get it.
- Nevada, Washington, and Iowa are the most anti-competitive states in the nation, requiring a third of the workforce to get some kind of government license to work. Nevada is also among the states that imposes the heaviest burden in terms of time—it takes an average of more than a year worth of experience before a person can get a license. (Are Nevadans that much more protected against dangerous or dishonest business practices than California? Personal experience suggests not.)
- Licensing isn’t something consumers want—it’s something existing businesses want, so they can outlaw competition: “licensed professions’ degree of political influence is one of the most important factors in determining whether States regulate an occupation.” And the results: “Estimates that account for differences in education, training, and experience find that licensing results in 10 percent to 15 percent higher wages for licensed workers relative to unlicensed workers.”