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Occupational Licensure

Government regulation of occupations comes in the form of registration, certification permits, and licensure. A license gives an individual a “right to practice” legally.

The Issue

Occupational licensing has grown dramatically in the past 60 years. In 1950, one in twenty U.S. workers needed the government’s permission to pursue their chosen occupation. Today, that figure is almost one in three.

Proponents of increased licensing argue licensure protects public health and safety while improving the quality of services. If service providers are not required to get licenses, the public will have low-quality, unsafe services, according to some legislators.

On average, low- and medium-income jobseekers in licensed professions are required to spend nine months in education or training, pass an exam, and pay more than $200 in fees. The laws also restrict minority entry into professions, as proven by severe drops in the number of African-American plumbers after states enacted licensing laws.

Researchers who have studied the issue disagree. Carolyn Cox and Susan Foster find the costs of occupational licensing likely outweigh any presumed benefits. Occupational licensing increases the cost of providing professional services, and the price to consumers increases as a result. A report by the FTC’s Bureau of Economics found the average price for certain eye care services was 33 percent higher in places with licensure restrictions compared to those without. Thus licensing hurts consumers instead of protecting them.

Our Stance

Occupational licensing regulations disproportionately harm the poor. With less work experience and fewer employment opportunities, the poor are unable to break into entry-level positions or businesses requiring little start-up capital because licensing laws exclude them, according to Adam Summers of the Reason Foundation.