From the medieval guild system to modern labor unions and professional associations, there have long been groups that provide training, assistance and gatekeeping for those interested in entering a profession. But there is a trade-off to these groups, and government or private systems which are too strict and block too many entrants to an occupation can impose costs on the rest of us.
Occupational licensing laws have a significant effect on the labor market. The bulk of the research suggests these laws limit the number of workers, increase costs to consumers and prevent those with a criminal background from achieving employment. As the percent of the workforce now needing a license has increased, these negative economic effects have been magnified.
The argument from proponents of licensure is typically that the benefits of state laws are worth it. Most arguments for state licensing center around health and safety effects. If state lawmakers are going to pass new licensing laws or continue with old ones currently on the books, they should be sure the benefits of the regulations outweigh the costs.
The review process suggested in this report is one way to do that. Applying the process to four occupations — painters, roofers, school librarians and barbers — shows the value, and limitations, of this analysis.
Based on this review, the value of requiring licenses for painters and school librarians should be called into question. There is nothing inherently dangerous about these occupations, and the review shows that many states regulate the professions in ways that do not erect large barriers for aspiring professionals like licensing laws do. There is no evidence that the general public is better off as a result of these licensing laws.
For roofers and barbers, the need for quality control is more obvious. Consumers could be put in danger if this work is not done correctly. And workers could be put in danger if they are careless. Despite this, there still is the question of whether licensing requirements contributes to minimizing these risks. It is not obvious that a less obtrusive quality control method would not work just as a well, such as mandatory inspections. These should be preferred if they can accomplish the same goals of licensing without erecting barriers to the profession.
As demonstrating in the review of four sample occupations, reviews of this kind will not answer every question: some information will be just too difficult to obtain or does not exist. And many occupations do not have similar jobs to which they can easily be compared. It is impossible to compare outcomes for occupations that are licensed in all 50 states, like barbers. But some information and analysis is better than none, and states should still find value in analyzing occupational licenses with this tool.
Overall, this sample review and analysis suggests that states regulate occupations in a variety of inconsistent ways. Objective health and safety measures do not seem to be considered. It’s unlikely that when states began licensing most of their occupations that they performed any systematic analysis at all to justify the regulation. This analysis can serve that purpose, even if these occupations have been licensed for decades.
It’s important to review these regulations because there is a trade-off between providing the environment where individuals can create employment opportunities and protecting the general safety of the public. How do states ensure proper regulation, targeted at the issue they are trying to mitigate, without locking people out of work and causing worse problems? Applying this review process to occupational licenses on the books in regular intervals is one way towards answering that question.