Occupational Licensing is a Barrier to Economic Opportunity

Ezra Klein:

Here’s a fun fact: “In 1950, fewer than 5 percent of Americans worked in jobs that required licenses. Today, it’s roughly 30 percent, and that number is likely to grow.”

That’s from Jacob Goldstein, who notes that, at least in Utah, one of those jobs is “African hair-braider,” which falls under the jurisdiction of the state’s “Barber, Cosmetology/Barber, Esthetics, Electrology and Nail Technology Licensing Board” — nice name — and has been judged to require a cosmetology license at a cost of almost two years of school and $16,000 in tuition.

If you want to see the permissions required to work in your state, the Institute for Justice has a comprehensive report that includes licensing profiles for every state. In Washington, D.C., for instance, interior design requires a license, and that license requires almost six years of education and apprenticeship, not to mention passing an exam. This is all so interior designers don’t…what? Make your house look ugly?

After all, in 47 other states, interior design does not require a license. And they don’t seem plagued by interior design fraud, or even unusually unattractive interior design choices. So it’s hard to see what compelling interest in being served by making it so difficult for aspiring interior designers to enter the market.

There are examples, of course, of occupations that really should require licenses. I’d like some certainty that my emergency medical technicians, for instance, know what they’re doing — though, in D.C., the EMT license, unlike the interior design license, does not include a mandatory number of days you need to spend in training, nor an exam you need to pass.

It’s hard to make the “necessity” argument, however, for barbers, or cosmetologists, or funeral attendants. In the United States today, over 1,000 different professions require this sort of licensing. All too often, the license is a mixture of protection racket and backdoor tax — and it comes at the cost not just of jobs, but of new business formation, and economic experimentation.

“Our best shot at creating a decent economy in the future will come from making it easier for workers to shift out of dying careers and into promising ones,” concludes Goldstein. “Workers need to be able to experiment and to fail (quickly and often) until they find the real, valuable skills that customers will pay for. This will take years. And in order for them to do that, we need to start by making it easier to braid hair in Utah.”