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Do You Have a License for That?

Rejected Stamp_LicensesWhen the government grants permission to work

What do teeth whitening in Connecticut, hair shampooing in Tennessee, and interior designing in Florida have in common? They’re all licensed occupations. In other words, only individuals who have completed the necessary steps to acquire a license can legally provide these services.

Occupational licenses are intended to protect the public from the dangers of unqualified providers. But over the past 50 years, state and federal authorities have been licensing more and more occupations that pose little or no obvious threat to the public. In fact, today, as many as one in three U.S. workers requires a license—government permission to work.

So what’s the impact of all this licensing? Its effect on our economy is threefold: Licensing enables industry-wide cronyism, disproportionally burdens lower-income individuals, and hampers job growth.

A Crony’s Tale: Whitening Teeth

In a free market economy, companies succeed by offering better products and services to their customers. But in a less-free economy, companies can also lobby for licenses that restrict competition, stunt innovation, and limit market entry. For consumers, the outcome is generally the same: higher prices without higher quality products.

A case in point is the Connecticut Dental Commission (mostly dental professionals), which has declared teeth whitening without a dental license a felony. As a consequence, local mall salons, tanning booths, and other non-dentists (which charged $100–150 per session) have been restricted from offering tooth-whitening services to their customers, who must now go to dental professionals ($300–700 per session) instead.

Licensing and Lower Incomes

Licensing schemes often impose hefty time and monetary costs on low-income occupations, hurting those trying to enter the workforce and restricting their career choices and opportunities. Becoming a licensed shampoo technician in Tennessee, for instance, involves at least 300 hours of course instruction in “the practice and theory of shampooing at a school of cosmetology.”

The Institute for Justice tracks licensing regulations for lower-income occupations such as bartenders, barbers, and landscape contractors. Its 2012 report, Licensed to Work, shows that the average requirements for such jobs are $209 in fees, one exam, and nine months of training. Once licensed, the average worker can expect to make less than $30,000 per annum.

Interior Designers—More Dangerous Than They Look?

In 1988, the state of Florida decided to require all interior designers working on commercial buildings to obtain a license. Why? Because the state felt it needed to protect Floridians from . . . well, it’s not exactly clear what. The move came in response to lobbying efforts by Florida interior designers, who persuaded lawmakers to restrict use of the title “Interior Designer” to those who undertook six years of costly post-secondary education, an apprenticeship, and a state exam.

However, the state regulatory board now admits it lacks evidence that licensing commercial interior designers has led to better job performance, greater safety, or “otherwise benefited the public in any demonstrable way.” Perhaps that’s why Florida is one of only three states in the U.S. that limits this particular form of economic activity by requiring a license.

In societies that enjoy high levels of economic freedom, individuals with great ideas can pursue those ideas and try to turn them into great products. Everyone else in society benefits as a result, either from those new products or from the new jobs they create.

But today, occupational licensing is eroding U.S. economic freedom—hindering the launch of new enterprises, restricting competitors from entering industries, and stifling employment. In short, we’ve given our lawmakers and regulators the power to snuff out ingenuity, innovation, and entrepreneurship.

Comments

  1. G Hazel says:

    Licensing Interior Designers and other jobs that really don’t involve safety issues is usually a ploy by people already in the industry to limit competition, and raise the bar to entry. They do what they can to convince lawmakers into passing regulations by using scare tactics, and since they are organized and well funded, the individuals who might be affected often don’t have the resources to fight back.

    • jojo58 says:

      You’re right. If you think about how interior decorators got started to begin with was someone admiring someone else’s home and finding out who did the work and if they were willing to offer their services. These tactics you write about is the exact reason why lawmakers need to keep their noses OUT of business, especially since they tend to be a bunch of lawyers that don’t know anything about anything except lawsuits.

    • Your comment is pretty comfortable from one major point of view: cit involves the idea of competition. But, the outcomes can actually be completely different in practice. Not the best people can get the license and not the best people affort to pay for it! As a consequence, not the best people will get on the market. Government or state regulation is detrimental to competition in reality. Especially when it’s doubled by bad laws regarding job protection imposed on employees (see Europe’s socialism where there are countries in which governments have to ensure job safety! what a concept….it lead to the crash of competition because people don;t have to really show any abilities, their jobs are safe).

  2. jojo58 says:

    It’s not limited to just stupid educational requirements like shampooing hair or being an interior decorator (the teeth cleaning I wouldn’t want someone unfamiliar with tooth structure because some people don’t have a thick layer of enamel and the whitening process can make the teeth more porous and cause more staining and hot/cold sensitivity)

    Well, we had an idiot city council member who was a licensed plumber that got a law passed stating that only a licensed plumber could install a hot water tank. A hot water tank is one of the easiest things to change, but I had to hire a plumber, who had to pull a permit and I had to have it inspected. Next time, I’m going to do what my neighbors did….drive six miles to the neighboring state, buy the hot water heater (tankless) and install the thing myself.

    • Neurom4ncer says:

      While it may be true that some licensing requirements are overzealous, your plumbing example is not the best choice to illustrate that. Improperly installed hot water heaters can explode and cause massive properly damage, injury, or death. That is actually a great example of a *seemingly* harmless task that *should* be handled by a licensed professional.

      • George Smith says:

        If only “licensed” meant “qualified”. The problem is that some people with licenses aren’t very good, and some people without then do great work. If the good guys were all licensed and the bad ones weren’t, it might be useful.

      • Pete the Plumber says:

        And licensed plumbers can also instal water heaters improperly.

      • If you install the hot water tank in your own house, mess it up, and cause property damage, injury or death, then you are to blame. The government is not charged with defending me against me. Imagine if the pioneers had to get a permit to build their home.

  3. Jayjc08 says:

    In most major metropolitan areas you need a license for any sort of unfinished construction work. My city for example has a requirement for any electrical or plumbing work to be done by a “licensed professional”, in which there is no requirement for education but a costly competence test… administered by the local union, in which there is a fee of nearly one grand charged for said test.
    Many companies too do not allow specific forms of work due to this. Until recently Lowes did not allow electrical work to be done under contract by their subcontractors and only limited plumbing. This is probably of course also due to liabilities but I would not doubt if the different licenses and regulations, varying per state, had a say in said policy.

    • George Smith says:

      Years ago, my uncle installed a hot water heating system in his house in a small town in Pennsylvania. When the inspector discovered that my uncle had done the work, he expected that he would need to reject it. The inspector turned out to be an honest man and ended up complimenting my uncle on his workmanship. My uncle had no license, and it was not required by law. The inspector told him that his work not only passed inspection, it surpassed it. There are people without licenses that do excellent work!

  4. Mellowd says:

    I actually am a degreed Interior designer. Licensing for the design of commercial interiors is actually important. There are many safety issues that the majority do not know of as well as ADA laws that need to be complied with. There is more to interior design than what is seen on the crap HGTV and TLC channels. What they do really is “interior decorating” and should never be called interior design. The testing for licensure is also very strict and not easy to pass. Residential design is a different story and is more along the lines of decorating (which is why I never went that direction). Forcing people to rely on licensed professionals in some occupations truly is a money scam, but in the case of “Commercial” interior design, it is a good thing.

    • Willa says:

      Sorry, but here in Florida, the required interior designer for commercial buildings tends to simply make the project cost way more than it would have otherwise. Most safety features have been included in the plans by the architects and contractors. Our designers end up making our furniture more expensive as well as stark and ugly, wall colors sometimes ridiculous. Large spaces are used to do nothing profitable. The designers, often having no science background, dictate how school and clinical labs must be set up. Their plans are often poorly workable. So far as I have seen, it doesn’t take a licensed commercial interior designer to set up a building properly for ADA specs when the architect has done his job properly.

    • abrayoungham says:

      This is another reason why licensing is a scam – the licensees actually feed their egos on the argument that they are special in some way – their speciality being judged by themselves, rather than where it ought to be judged – in the marketplace among competitors, not by cliquish consensus groups.

  5. Kent Norton says:

    wait till they licence commercial and private artists before exhibition; public safety; someone may be shocked at the art

  6. grossed out says:

    I remember something about MN… where electrical work requires a permit. Thing is, that includes plugging in refrigerators, freezers, and changing light bulbs.

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