NCPA - National Center for Policy Analysis

Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs

July 25, 2012

Every state licenses medical doctors, lawyers, nurses and chiropractors -- professions that most people would say should be licensed. Every state also licenses architects, surveyors and cosmetologists -- professions that some people might be less likely to agree should be licensed, says Byron Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute.

There remain, however, a host of occupations that are similarly regulated without an obvious and crucial need for such regulation.  Indeed, several states even license such workers as animal caretakers, craft artists and librarians.

These regulations are often supported and promulgated by players within these industries who seek protection from outside competition. The unfortunate side effect of these lobbying actions is great market rigidity: workers are less easily adapted to new professions when they have lost previous jobs.

Recognizing that some licensing requirements are necessary to protect public welfare, Schlomach has proposed six public policies that would weed out the essential regulations from the pool of unnecessary ones, maximizing economic outcomes:

  • Create a "sunrise" provision that requires advocates of new licensing proposals to prove their need before they are approved.
  • Require that all licensing laws be periodically reauthorized after a rigorous review process.
  • Require licensing boards have a supermajority of members drawn from the general public rather than the profession itself.
  • Replace mandatory licensing with voluntary certification, encouraging professionals to seek what are essentially accolades in order to distinguish themselves from less-skilled competitors.
  • Enact legislation affirming the right to earn a living, thereby encouraging state legislators to be more cognizant of regulations' impact on the job market.
  • Expand the scope of practice for some paraprofessionals (such as paralegals and registered nurses), allowing them to perform more services and alleviate demand for license-holding professionals.

These reforms would boost job creation and economic activity as new career opportunities become available in areas once difficult to enter because of costly and often unnecessary licensing requirements.

Source: Byron Schlomach, "Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs," Goldwater Institute, July 10, 2012.

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