Professional Licensing Is Killing Opportunity
April 1, 2016
Byron Schlomach, Ph.D.
By Byron Schlomach
I recently sat with my son to watch a television program he had accessed through Netflix about the sport of boxing. A significant portion of the program was devoted to the sociology of the sport. It was pointed out that as you look at the best fighters over the decades, their backgrounds tell a story of which ethnicities were struggling in America at the time. Although it was not at all a focus of the program, an interesting and tragic insight into the impact of professional licensing struck me as I watched.
The show partly explored why so many boxers have prison records. One explanation is that there are few professional options open to felons. One of the most popular skills training programs in prison is barbering. However, while these skills are useful in prison, where licensing is not required, they are useless outside of prison for an individual with a felony conviction on his record. Barbers are licensed by every state in the Union. Felons are almost universally blocked from being licensed. This is one reason some felons turn to boxing.
Some, maybe most, are likely to say it’s a good thing that felons are not allowed to practice licensed professions. Licensing—a system whereby government regulates who can practice a profession through educational and experience requirements—is, after all, supposed to be a guarantee of high quality.
Except it’s not. America’s hospitals have had a veritable epidemic of hospital-caused infections in patients. The number one cause of this epidemic is the failure on the part of doctors and nurses to wash their hands. A study was once conducted of hospital greens—the loose-fitting green clothing many doctors and nurses wear on a daily basis as they go about their duties. These clothes were swabbed and they were found to be veritable petri dishes of microscopic vermin. Their wearers often went a week or more at a time without washing their greens.
Obviously, not all doctors and nurses are so careless in their personal hygiene. But it is obvious too that licensing, despite its educational requirements, was not enough to ensure that licensed professionals would all use soap and water on their hands and clothing with the regularity required for hospital work.
Economist Morris Kleiner, the nation’s foremost authority on licensing and its effects, has pointed out that liability insurance premiums in states for unlicensed professions are no higher than in states that license the very same professions. If licensing truly reduced danger for the public through its requirements on those holding a license, the first to notice would be insurance companies, since you would expect fewer liability claims against licensed professionals. However, this is evidently not the case.
The history of licensing, even in the medical and legal professions, is not particularly reassuring, either. There is no evidence of widespread mayhem in the absence of licensing, in any profession. Abraham Lincoln could not have practiced law under today’s licensing requirements. Most studies of licensing discern little or no qualitative benefit for consumers.
While licensing does little to nothing to protect the general public, it does accomplish one thing very well; it enriches and protects those who practice licensed professions. Licensing serves as a gatekeeping mechanism, creating a series of often onerous hoops for potential professionals to jump through, weeding out many who could otherwise do an excellent job within the profession. Cosmetology licenses commonly require more training hours than are required of Emergency Medical Technicians. This time and money commitment prevents many from getting the training and entering the profession.
By effectively regulating the supply of new entrants into a profession, licensing keeps the fees of the practitioners of that profession higher than they could otherwise be. The result is an artificial transfer of income from consumers to licensed producers.
Professional licensing also blocks opportunity. African hair braiders have been forced out of business for lack of a cosmetology license—even though most cosmetology programs teach nothing about braiding. Horses’ teeth must be filed (floated) since their teeth constantly grow. Veterinarians have forced people who only float teeth out of business for practicing veterinary medicine without a license despite the fact that veterinarians are taught little about the art of floating horses’ teeth and generally do a much worse job of it. And the floaters were only floating teeth, not performing other services.
So not only does professional licensing create artificial scarcity, it enriches those who are licensed, potentially impoverishes those who could provide many of the services licensed professions provide, and often denies consumers higher-quality, specialized services. While advocates of professional licensing claim it is for the public’s safety, it is evident that it is not. Nearly every new licensing law grandfathers in people who are already in the profession, presumably including those very individuals who previously presented a danger to the public for the lack of licensing.
Due to the expense of hiring licensed professionals, some might attempt dangerous do-it-yourself alternatives to professionally provided services. In some states, when midwifery was effectively made illegal by medical licensing, women resorted to having babies with only amateur assistance. Arguably, many would have been better off with an unlicensed but experienced midwife. Oklahoma law requires a licensed electrician to install new wiring and outlet boxes. But Oklahomans wire their houses and other structures themselves all the time. No doubt, some Oklahomans would benefit from some advice from permit officials, but they dare not get a permit for fear of the expense of hiring an electrician.
And licensing only begets more licensing. The most effective way for floaters of horse teeth and animal massagers to protect themselves from harassment by veterinarians is to get their own licensing laws. This is why there are separate licensing laws for osteopaths, podiatrists, chiropractors, and naturopaths. Physical therapists are often licensed, and so are massage therapists. In Arizona, some physical therapists began to practice “dry needling,” but this is a lot like acupuncture and the licensed acupuncturists were up in arms. Legislators—amateurs in both professions—had to arbitrate the dispute.
In Oklahoma, a higher percentage of the workforce is licensed than in 40 other states. The state licenses more professions than most other states as well.
Licensing laws prevent the strengths of free enterprise from showing themselves. People with the discipline to develop a craft are prevented from profiting from that discipline. Those who could provide a service at a lower cost and at higher quality than those who are licensed are blocked from doing so. Prices stay too high. Social classes and positions of privilege develop. Even the Obama administration has recognized what free enterprise advocates have for years. Licensing is detrimental to our economy and our society.
One solution is private certification, whereby potentially competing private associations facing minimal disclosure requirements certify individuals to practice professions and no one is precluded from practicing a profession by licensing law. We already have this in medicine, whereby hospitals certify physicians to do surgery and specialties are privately certified. This is an approach to public safety for a society that cares about freedom and opportunity. Licensing is not.
Byron Schlomach (Ph.D. in economics, Texas A&M University) is state policy director for the 1889 Institute, an independent research organization. He is a scholar in residence at the Spears School of Business at Oklahoma State University. He previously served as director of the Center for Economic Prosperity at the Goldwater Institute, and prior to that was chief economist for the Texas Public Policy Foundation.