Repealing Useless Occupational Licensing Laws Could Reduce Crime, Lower Prices for Consumers

Hans Bader | June 20, 2017 | 10:24am EDT
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People are more likely to return to a life of crime if they can’t find a job after being released from prison, according to a study released by the Manhattan Institute. Occupational licensing laws make it harder for them to find a job. Reason magazine notes that a ten-year study released last year by Arizona State University found that “formerly incarcerated residents are more likely to commit a new crime within three years of being released from prison if they live in a state where they’re prohibited from getting a license solely for having a criminal record.”

Once upon a time, occupational licensing laws only restricted access to jobs that had unique privileges (such as lawyers, who can send you a subpoena demanding your diary) or that had unique public safety implications (like a surgeon, who can kill you through a botched operation). Not anymore.

Now, many jobs that pose no special risks or need for regulation are off-limits to people who have criminal convictions, or never committed a crime, but can’t afford to spend years on unnecessary training that may be irrelevant or obsolete. Florida requires interior designers to undergo six years of training, including two years at a state-approved college. Other states force aspiring hair stylists to first attend exploitative beauty schools that often rip off their students. And “twenty-one states require a license for travel guides,” notes the Brookings Institution. Occupational licensing has expanded from covering 5 percent of the workforce in the 1950s to 30 percent today, to the point where it covers many ordinary jobs.

So there is no reason ex-cons should not be able to hold many of the jobs now off-limits to them due to occupational licensing regulations. It’s not as if consumers benefit. Indeed, according to Morris Kleiner at the University of Minnesota, occupational licensing has either no impact or even a negative impact on the quality of services provided to customers.

So they don’t protect consumers, for the most part. But they do increase increase prices; a White House report during the Obama administration noted that studies consistently “find that more restrictive licensing laws lead to higher prices for consumers.”

As Ramesh Ponnuru noted at Bloomberg News, these laws both raise prices, and cut the “wages for the people they exclude. More restrictive requirements to become a nurse practitioner, for example, increase the price of a child’s medical exam by as much as 16 percent.” As the White House report pointed out, there is an enormous variety and inconsistency in state licensing requirements—more than 1,100 occupations are regulated in at least one state, but fewer than 60 are regulated in every state—which hinders interstate mobility, and harms military families, who often have to move from state to state. As the Brookings Institution has noted, licensing restrictions are not keyed to public safety at all, since “across all states, interior designers, barbers, cosmetologists, and manicurists all face greater average licensing requirements than do EMTs.”

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law.


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