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Occupational licensing laws hurt new graduates

By and   /   May 7, 2015  /   No Comments

Photo by: Shutterstock

Photo by: Shutterstock

By Diana Furchtgott-Roth and Jared Meyer | Watchdog Opinion

Occupational licensing, the requirement that people pass tests to gain government permission to work, is making it harder for young people to begin their careers. By keeping young people out of certain industries, or by making it prohibitively expensive and time-consuming for them to work, occupational licensing increases costs for all Americans and limits opportunity for those looking to enter the field of their choice.

Government-imposed limits on work extend far beyond the professional fields of medicine, law, and accounting—fields for which the need for a license is commonly accepted. About one in three occupations requires a government license or certification, and nearly 40 percent of U.S. workers will need to get government permission to work at some point in their lives. By contrast, less than 5 percent of the workforce needed a license in the early 1950s.

Some limits on work seem specifically directed at the young. In Virginia, those who trained yoga instructors had to be certified by a state board of older bureaucrats who probably knew nothing about the recent yoga craze. A similar Nevada law restricts the teaching of how to apply makeup, a skill at which many teenage girls excel. These cases not only hurt those who want to teach—they affect the young people who want to learn a skill and put it to work.

Those who want to be computer-repair technicians in Texas must obtain a private-detective license because of overstated concerns about security. Young people grew up with computers; their parents and grandparents often already ask them to help organize and repair their home computers—without a private-detective license.

Misguided laws such as these make it illegal for young people to share their knowledge and earn some money while doing so.

Photo by: Shutterstock

Photo by: Shutterstock

Tour guides in cities such as Charleston, Savannah, and New Orleans must gain certification before the government allows them to earn money by walking and talking—two rights clearly protected by the American Constitution. These cities are known for their number of colleges and universities, but now, unless they spend their limited time and money getting a license, students cannot earn money to pay for their education by showing tourists around on the weekend.

The case of Christian Alf shows that many state licensing boards are looking out for their own interests, not those of the public. The Arizona teen started a business repairing holes in his neighbors’ roofs to protect them from roof rats. All Christian needed to do this was a ladder, chicken wire, and a staple gun. He charged $30 for his service and quickly drew attention from interested homeowners—and envious pest-control companies. Christian was doing what pest-control companies charged hundreds of dollars to do, so they sent a government agent to his front door to demand that he stop providing unlicensed pest control to his neighbors. One problem: Christian was performing handyman work. He was not using any chemicals or traps that could possibly provide rationale for mandatory training and government certification.

The Institute for Justice, a public-interest law firm that defends individuals’ rights to earn a living, stepped in to defend Christian. Arizona’s Structural Pest Control Commission stepped back under the weight of public pressure, finally allowing Christian to provide his neighbors with valuable services, free of government harassment.

Young people are hardest hit by the effects of occupational licensing, along with the poor. Costly, time-consuming entry barriers limit the competition that would keep prices down, so consumers pay higher prices while also being excluded from job opportunities.

The time and financial burdens of getting a license vary considerably across states. This variation shows that public safety cannot be the main concern of lawmakers, despite their claims to the contrary. Although 10 states require four months or more of training for manicurists, Alaska demands only about three days and Iowa about nine days. If it really takes more than four months to learn how to manicure nails without injuring customers, why do 40 states have much shorter requirements?

Photo by: Shutterstock

Photo by: Shutterstock

On the other hand, bus drivers, who are licensed in every state, can begin working for less than $100 in training fees and 90 days’ experience. The health and safety of the public is directly affected by the work of emergency medical technicians, yet 66 other occupations face greater average licensure burdens. States consider an average of 33 days of training and two exams enough preparation for EMTs, but they apparently think that interior designers need 70 times more training. It should not require more training to become a government-approved interior designer than a bus driver or an EMT.

The strictness of occupational licensing laws is correlated with the rate of youth unemployment. The unemployment rate in 2012 for 16- to 19-year-olds in the 10 states with the least burdensome licensing requirements was 19 percent, compared with 27 percent for the states that have the most burdensome requirements. For those ages 20 to 24, these numbers were 11 percent and 14 percent, respectively. The difference in licensing requirements might be one factor contributing to the wide variation in youth unemployment rates nationwide. Jobs that require licensing are among the most attractive to young workers, who are penalized by high barriers to entry.

The unemployment rate for young people is 10.5 percent, more than twice the 4.4 percent rate for those 25-years and older. As students graduate this May and move into the workforce, states should take a serious look at their occupational licensing laws.

This article is based on their new book, Disinherited: How Washington Is Betraying America’s Young (Encounter Books, May 2015). 

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Diana is a senior fellow at the Manhattan Institute.