Should a florist require a government-issued license before they arrange your bouquet?
Most Americans would say no, yet about a quarter of Americans work in jobs where they need to fork over a substantial chunk of time and treasure to meet licensing requirements before they are allowed to enter the workforce. Sure, some of those affected need licensing requirements – like surgeons or nurses – but this also affects jobs like hair braiders and house painters.
It’s not about public safety. By raising barriers to new individuals entering a service market, the existing professionals can limit competition.
This problem is getting worse. According to Senator Mike Lee, “In 1950, fewer than 5 percent of American workers were subject to licensing requirements. Today, that figure stands at around 30 percent. ”
And those licenses can be very burdensome to obtain. Check out these findings from a 2017 Institute for Justice report:
The study found that, nationwide, the average licensing applicant is required to complete nearly a year of training, pass at least one exam, and pay over $260 in fees before joining an occupation or trade. The report also found that about one in four U.S. workers must obtain government permission to pursue a chosen career — even for such occupations as florist or animal massager. As a 2016 report from the Brookings Institution noted, “[R]estrictions from occupational licensing can result in up to 2.85 million fewer jobs nationwide, with an annual cost to consumers of $203 billion.”
These requirements pose significant and seemingly pointless barriers to entry, particularly for low-income individuals who may not have the resources to spend, say, $8,000 to attend cosmetology school. Further, even those who do obtain the necessary licensure in one state are often barred from practicing their trade in other states without undergoing further training at additional cost. Beyond limiting upward mobility, licensing thus limits geographic mobility — historically a key component of economic success in the U.S.
What’s more, the public stands to gain very little from most of these mandates. Too often, incumbent members of licensed occupations intentionally promote stringent licensing requirements as a form of economic rent-seeking, sometimes called “opportunity hoarding.” The more difficult it is for new members to join a given profession, of course, the less competition established members of the profession will face. For example, Louisiana’s Horticulture Commission administers an exam for aspiring florists that originally included a hands-on practical portion in which they created flower arrangements that were graded by already-licensed florists. Needless to say, the incumbent florists had a direct financial incentive to grade harshly and thus prevent new competitors from joining the field.