Designing Government-imposed Cartels

John Kerr
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Posted: Sep 24, 2014 12:01 PM
Designing Government-imposed Cartels

It takes a keen sense of color, light, personality and function to make a living as an interior designer. Depending on where you live, however, it may also take permission from the government.

Likewise for tree trimmers. And florists. And landscapers, auctioneers, travel guides, bartenders and upholsterers – all of whom may break the law in some places, risking fines and imprisonment, if they work without first obtaining a government-issued license.

Hundreds of jobs – comprising about 30 percent of U.S. workers, up from about 5 percent in the 1950s, according to a University of Minnesota study – are now subject to licensing somewhere across the country. Few people would argue against state licensing of medical doctors or others who directly impact public health. But upholsterers? Florists?

In fact, many of these laws have only a tenuous link to consumer protection or public safety and instead serve as protectionist barriers that benefit existing practitioners while restricting worker mobility, driving up costs, limiting consumer choice and stifling innovation.

In dozens of states, it takes more class time to become an auctioneer or cosmetologist than an emergency medical technician who literally holds people’s lives in their hands. In Florida, an unlicensed interior designer faces up to a year behind bars and a $1,000 fine. (The answer here isn’t to regulate EMTs more; it is to regulate other occupations less.)

To make matters worse, these licensing statutes often fall disproportionately on those at the lower end of the economic or educational spectrum, imposing costs and classroom requirements that can discourage potential entrepreneurs from starting a business or prevent those eager to work from taking a job in their chosen field.

As the economy remains sluggish, the explosion in state licensing boards has drawn the attention of both Democrats and Republicans debating how to prime the job market. Rep. Paul Ryan, the Wisconsin Republican, argues in his anti-poverty plan that, “Eliminating irrational or unnecessary licensing requirements would . . . open up new opportunities for low-income families and reduce costs for consumers.” Across the aisle, Democratic Rep. Grace Meng of New York acknowledged at a March subcommittee hearing that “we must look at the implications licensing has on entrepreneurs.”

A comprehensive 2012 study by the Institute for Justice, a public-interest law firm, found that the patchwork nature of this regulatory approach calls “into question” the rationale for imposing severe burdens. “For instance,” notes the report, License To Work, “while 10 states require four months or more of training for manicurists, Alaska demands only about three days and Iowa about nine days.”

Such vast disparities reveal the major problem: These mandates are often less a result of rational public safety concerns and more a reflection of the lobbying clout wielded by self-interested trade organizations that advocate for such restrictive statutes.

The spread of occupational licensing offers an opening for politicians with diverse philosophies and constituencies to find common ground. Reversing the growth of occupational licensing would appeal not only to those eager to create jobs and reduce the costs of services in low-income communities, but also to those who oppose oppressive government regulation.

Paul Ryan, Grace Meng and other members of Congress must continue to highlight the injustices of over-aggressive licensing requirements and the economic benefits of removing the statutory hurdles preventing thousands of Americans from earning a living. Meanwhile, governors and state lawmakers, who impose and enforce the vast majority of these counter-productive requirements, should take an inventory of their existing occupational licensing laws and eliminate or relax those that have little legitimate relationship to health and safety.

In the absence of unnecessary licensing requirements, existing laws governing contracts or fraud, along with online ratings of service providers, can shield consumers from unscrupulous or incompetent operators. And professional organizations such as the American Society of Interior Designers – which laughably insists that licensing designers protects the health, safety and welfare of the general public – would remain free to endorse those who meet their standards.

States should promote work and encourage entrepreneurs rather than strangle them with onerous licensing requirements that shield entrenched interests at the expense of newcomers. Men and women shouldn’t need a government permission slip to support their families.

And if your interior designer uses too many clashing throw pillows, call another designer, not the authorities.