Thursday, August 27, 2015

Licensing costs over $100 billion, U.S. report says

Occupational Licensing Hurts Just About Everyone, Says White House - Hit & Run : - Elizabeth Nolan Brown:

July 31, 2015 - "Horse masseurs. Hair braiders. Funeral attendants. Florists. All are subject, at least in some states, to 'occupational licensing,' defined by the Treasury Department as 'a government permit allowing workers to legally practice.' Since the 1950s, the number of U.S. jobs where workers are required to be licensed by the state has increased five-fold, now encompassing about a quarter of our working population. Far from being merely a minor inconvenience for workers, this excessive licensing regime 'creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job,' according to a new report from the Treasury, the White House Council of Economic Advisers, and the Department of Labor.

"Libertarians have been objecting to occupational licensing on these grounds for decades, of course; the free-market friendly Institute for Justice has even been systematically suing to bring about their demise. But it's rare to see federal agencies recommend against more economic regulation, so let's all just savor this small victory a moment. The scathing report paints occupational licensing as a regulatory scheme that serves almost no one any good — raising consumer costs while failing to deliver improved quality; reducing employment opportunities, especially among the most economically vulnerable; and hampering state-to-state mobility and market innovation.

"'By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars,' the report authors write.

"'Consumers are likely most familiar with licensing requirements for professionals like dentists, lawyers, and physicians,' they point out, 'but today licensing requirements extend to a very broad set of workers,' including auctioneers, scrap metal recyclers, barbers, manicurists, eyebrow threaders, and tour guides. This means that an ever-growing share of jobs 'are only accessible to those with the time and means to complete what are often lengthy' — not to mention expensive — licensing requirements, while the penalties for working without a license can include job loss, fines, and even incarceration.

"Yet stringent occupational licensing seldom delivers improved services or safety to consumers. In 10 out of the 12 empirical studies reviewed by the report authors, stricter licensing was not associated with quality improvements."

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