Occupational licensing reform gives more Americans a shot at success

Government regulations are keeping young people down at the expense of established, older generations. Instead of using occupational licensing rules to protect their cronies from competition, lawmakers should reform and remove these unfair and unnecessary rules, giving everyone a shot to succeed in life.

Lawmakers in many states are considering bills that would reform occupational licensing rules, which are government restrictions regulating who may work in which professions. In South Dakota, lawmakers have already approved such reforms, getting government out of the business of telling people if they’re allowed to do business.

{mosads}Unfortunately, lawmakers in some states, such as Iowa, are resisting the trend toward more freedom, voting to kill similar measures. In a show of defiance, during a committee hearing, Iowa state Rep. Bobby Kaufmann (R-Wilton) literally tore up a bill relaxing government restrictions on dietitians, athletic trainers, and teeth-whitening specialists.

“I wanted to publicly declare that when it comes to licensure reform and the taking away of all the things that you all have done and that you have dedicated your lives for, as far I’m concerned, my opinion is this,” Kaufman said as he physically ripped up the 82-page bill, a move that was met with applause from the industry guild representatives testifying against the bill that day.

Instead of protecting consumers and ensuring the public’s safety from dangerous fitness trainers, for example, these “government permission slips” protect the pocketbooks of established businesses in the regulated field — all at the expense of job seekers, especially younger Americans.

Supporters of occupational licensing — often the guild members trusted by the government to regulate occupations because they are in that industry — say these alleged protections are necessary to protect consumers from shoddy service.

Economic studies analyzing licensing’s effects on service quality suggest that claim is false. Occupational licensing rules have little effect on public health and safety, writes Morris Kleiner, an economics professor at University of Minnesota’s Center for Human Resources and Labor Studies.

“Overall, the analysis of demand and quality does not show significant benefits of occupational regulation,” Kleiner wrote. “There is little evidence that occupational regulation has a major effect on either the quality of service received by consumers or on the demand for the service other than through potential price effects.”

In other words, government permission slips don’t really protect people from receiving bad customer service. So, if occupational licensing rules aren’t about protecting consumers, who do they protect?

In 1952, fewer than 5 percent of all workers were required to obtain government permission to work in their chosen profession. In 2008, the government’s use of occupational licensing had expanded to ensnare about 29 percent of all workers.

Almost 40 percent of all unemployed people in the United States were born between 1982 and 1992. Americans in this generation, commonly called “Millennials,” are being kept out of the workforce by government economic interference enacted by and benefitting preceding generations, including occupational licensing regulations.

More than 13 percent of individuals aged 20 to 36 are unemployed, according to data from the Bureau of Labor Statistics. By contrast, “Baby Boomers,” individuals aged 55 or older, enjoy the very low unemployment rate of 3.5 percent.

The game has been rigged in favor of older workers in existing, established businesses and industries. Instead of continuing to make policies benefitting people who have already got theirs, lawmakers should work to knock down the barriers keeping upcoming generations out of work, by trimming occupational licensing laws, removing economic disincentives to work, and reducing other regulatory burdens.

By eliminating these perverse policies, lawmakers can help people achieve their dreams, lower costs for consumers, and get more people back to work and out of entitlement programs. That’s a win for everybody.

Jesse Hathaway is a research fellow with the Heartland Institute, a national nonprofit research and education organization focused on developing and promoting free market solutions to social and economic problems.

The views expressed by contributors are their own and are not the views of The Hill.