Too often, in the name of public safety, state governments create licensing requirements for businesses and entrepreneurs that may seem like small annoying yet necessary hurdles intended to protect the public. But, this view of occupational licensing ignores the often short-sighted, unreasonable, and adverse impacts of these requirements.
A study by the Institute of Justice found that occupational licensing requirements have been extended to a surprising range of career fields. Most people would expect to hear that states regulate professions such as doctors or lawyers (although in Capitalism and Freedom the great Milton Friedman argues why this isn't a great idea), but licensing has also been established for low and middle income jobs such as hair stylists, athletic trainers, milk samplers, and barbers.
Occupational licensing is not just a nuisance for entrepreneurs, it comes with additional costs for training and licensing which can be significant depending on the state. For example, landscapers in California must pay $400 in fees, accumulate 1,460 days of experience, and pass an exam to be eligible for employment in the state. If someone want to become an interior designer in Louisiana, they must have over 2,000 days of education, pay a $150 fee, and a pass an exam. Additionally, the city of New Orleans requires licenses for people to become tour guides and tour planners. As Institute of Justice said about a similar licensing requirement, the government is essentially regulating “story tellers.”
In a free market, the ability of an individual to use his or her talents, resources, and skills to provide goods and services to others without unwarranted government interference should be paramount. Sadly, occupational licensing has threatened people’s ability to make a living and hurts the very people that the licensing in intended to help. Experts have referred to occupational licensing as “government permission slips.” Without these licenses not only can people not practice their craft, but some people can face fines or even jail time.
For example, Tennessee’s Department of Health have threatened two businesswomen, Martha Stowe and Laurie Wheeler, with significant fines and potential jail time for providing horse massages without a veterinarian license. Although both businesswomen possess certifications in the horse massage technique they are providing, the state is unreasonably requiring a higher level of licensing. The social benefit of jailing or fining an unlicensed florist or a unlicenced horse massager eludes most people.
As can be imagined, the people impacted most by these licensing requirements are usually society’s most vulnerable people, those who lack the education and resources to pass exams, let alone pay the fees. Additionally, Stephen Slivinski, a senior research fellow at the Center for the Study of Economic Liberty, has noted how overly burdensome licensing requirements in California hinders ex-convicts from entering certain trades and subsequently leads to increased recidivism rates.
Moreover, it is difficult to imagine how the aforementioned licensing requirements help promote public health and safety. If a barber cannot provide a nice haircut or an interior designer has a bad eye for designing and furnishing buildings, they create something aesthetically displeasing, but they fail to threaten public health or safety. If these workers or businesses are simply bad at their job, then they will be out of business and be forced to apply their trade elsewhere.
Government does not help individuals or society when it acts as a gatekeeper, especially in low and medium income career fields that have a lot of influence over the livelihood of hard working people. Taxpayers and consumers should be concerned by these government permission slips since they only tend to increase the cost of goods or services by barring outside, nontraditional competition. Reducing licensing requirements could go a far way in expanding the ladder to economic prosperity and better reflecting a limited role of government in the free market.