Feds moving to roll back occupational licensing is good news for American workers
It isn’t uncommon for regulators with worthy goals nevertheless to act in ways that create unintended consequences and do more harm than good. But the Federal Trade Commission’s new Economic Liberty Task Force offers an exception that proves the rule – a regulatory body that works to lower anticompetitive barriers, like unnecessary occupational licensing, that impose big costs on American workers and consumers.
Launched earlier this year, the task force is waging a campaign to expose the costs of these rules and, ultimately, to reverse them. It also is working with state governments to make employment more flexible and markets more competitive. It has opposed, for example, licensing requirements for jobs like shipping potatoes, filing animal teeth and selling caskets.
While just five percent of U.S. workers in the 1950s needed a license to perform their jobs, that total has risen to nearly a quarter of all workers today, according to the Bureau of Labor Statistics. A 2016 BLS report found that, among workers with median weekly earnings of less than $850, 47 percent of those in health-care support fields were licensed, along with 38 percent of those in protective services and 28 percent in personal care.
{mosads}Over and over, these requirements are found not to benefit consumers, but instead to increase advantages for established players in these field, who want to use licensing to keep out competition. Such rules harm consumers by artificially restricting the supply of services, and therefore, artificially increasing their price. A 2015 study by the Heritage Foundation found that occupational licensing laws cost consumers upwards of $127 billion each year.
They also harm would-be entrants to the field who are kept from competing and trying to make a living at their chosen career. These barriers to entry are a particular problem when it comes to reintegrating ex-offenders trying to emerge from the criminal justice system, who often are barred from any licensed occupation. In recent months, the Justice for Work Coalition has brought together a diverse and bipartisan group of advocates to fight occupational licensing rules that impose onerous restrictions on those who have paid their debt to society.
The Federal Trade Commission has also addressed other restraints, for example on the ridesharing market. In 2014 it told the City of Chicago that its proposed restrictions for transportation network company drivers “should be no broader than necessary to address legitimate subjects of regulation, such as safety and consumer protection, and narrowly crafted to minimize any potential anticompetitive impact.”
Burdensome background checks, famously imposed on transportation network company drivers in Austin, can unfairly screen out people who pose no danger at all. The federal background check system required by some cities and counties makes use of the FBI’s arrest database. As an employment screening tool, this system has been demonstrated to be unreliable, with half of the FBI’s records failing to include information on the final disposition of the case, such as whether the defendant was declared innocent, was convicted or pleaded guilty to a lesser charge or whether charges were dropped altogether.
Private companies already have ample incentives and means to determine the risks posed by new hires and to find the best ways to protect consumers. As TechFreedom president Berin Szoka observes, these licensure rules have “nothing to do with public safety and everything to do with thwarting competition.” Government-imposed licensure restrictions should be a last resort, narrowly tailored for cases in which public safety is truly at risk. Getting a job is one of the best ways for ex-offenders to become reintegrated into society. Restrictions on hiring them makes society less safe, not more so.
The FTC task force’s recent push to reform occupational licensing laws across the country will yield important benefits for consumers and workers, allowing markets and intelligent policymaking, rather than cronyism, to guide a dynamic economy.
Joe Kane (@TheJoeKane) is a tech policy associate with the R Street Institute, a nonprofit group working to limit government and reduce regulations.
The views expressed by contributors are their own and are not the views of The Hill.