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The Great Libertarian Idea in President Obama’s 2015 Budget

James W. Harris Comments

(From the Activist Ammunition section in Volume 20, No. 5 of the Liberator Online. Subscribe here!)

 Surprise! There’s at least one great — and solidly libertarian — idea in President Barac

Occupational LicensingObama’s 2015 budget: cutting back the plague of occupational licensing.

In an item entitled “Reducing Unnecessary Occupational Licensing Requirements” Obama announces plans to “reduce occupational licensing barriers that keep people from doing the jobs they have the skills to do,” noting that occupational licensing is “putting in place unnecessary training and high fees” in many fields.

President Obama proposes a $15 million in grants to states for “identifying, exploring, and addressing areas where occupational licensing requirements create an unnecessary barrier to labor market entry or labor mobility…”

This is yet another example of a libertarian/free market idea bursting into the mainstream.

Libertarians at the Institute for Justice, the Reason Foundation and elsewhere have long pointed out the harm of occupational licensing requirements.

For example:

  • Occupational licensing laws — found in all 50 states — restrict entry into over 1,100 different occupations.
  • They have grown explosively. In the 1950s, less than five percent of American workers were required to obtain a government license to do their job. But today, that number has passed an incredible 30 percent — meaning one in three Americans must obtain permission from the government to pursue their chosen profession. 
  • The cost of these laws to consumers is astonishing. One 2011 study estimated that occupational licensing laws increase costs to consumers by a whopping $203 billion per year. As a result, some people are not able to afford some services, including crucial ones like dental care. A 2009 study found that states allowing dental hygienists to provide routine dental care had fewer adults with missing teeth than those that did not.
  • Occupational licensing laws destroy millions of American jobs — by one estimate, a whopping 2.85 million jobs. They make it prohibitively expensive or too difficult for newcomers to enter fields in which they have competency but can’t afford costly and unnecessary training and licensing. 
  • Occupational licensing laws slow or even halt innovation. One recent example is the use of licensing regulations for taxi drivers to halt new, highly competitive app-based services such as Uber.
  • Among the occupations in which entry is restricted by licensing laws: interior decorators, hair braiders, foot massagers, animal breeders, bartenders, funeral attendants, upholsterers, shampooers, music therapists, auctioneers, talent agents, and ballroom dance teachers. 

Of course, supporters of occupational licensing argue it is needed to protect the public from unscrupulous or incompetent practitioners.

However, reports the Institute for Justice: “Research to date — on occupations as diverse as school teachers, interior designers, mortgage brokers, dentists, physicians and others — provides little evidence that government licenses protect public health and safety or improve the quality of products or services.”

Astute Liberator Online readers can probably guess the real reason these laws exist.

“These laws are created under the guise of ‘helping’ consumers,” wrote Adam B. Summers of the Reason Foundation in a 2007 study. “In reality, the laws are helping existing businesses keep out competition, restricting consumer choice, destroying entrepreneurship, and driving up prices.”

Further, many of these occupations are in fields where, in the past, the poor, immigrants and other challenged workers — those with the least resources — have been able to get a toehold in the economy.

To learn more, check out these resources:

Writing at National Review Online, economist Veronique de Rugy sums up the problem nicely:

“People who want to work, start businesses and make a living shouldn’t have to ask the government for permission to do so. Consumers can take care of themselves, especially with our sharing economy and the easy feedback mechanisms it offers. …

“Many of the licensed occupations have traditionally provided low-income Americans with a path to self-sufficiency and upward mobility. By erecting barriers to entry to these occupations, we erect barriers to entry to the American dream.”

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