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Occupational Licensing

By Tyler Bauer

Yes, I know how boring this sounds, but it’s actually really important so I’m writing about it anyway.

Occupational licensing is defined as “the legal permission that many workers must obtain before working in given professions.”

We generally think of licensing as applying to occupations like medicine, law, engineering, and other highly-skilled fields, and it generally seems reasonable to require licensing in fields such as these. Of course, you and I don’t demand to see our healthcare providers’ licenses every appointment. We may make small talk and ask where our healthcare providers went to school, but we don’t stop to ask whether the physician’s assistant is licensed in the state of Indiana.

However, some occupations which require far less skill also require licenses. For example, some states require a license to be a florist. Most states require a license to cut hair. Do we really need licenses for these occupations? Sure, there is training involved in learning these trades, but what good does a license do? Couldn’t florists and hairdressers learn from whomever is training them and do just as good of a job without a license? When you go to get a haircut, do you ask to see everyone’s licenses? Probably not. Instead, you just trust that every employee is capable of serving you because they are employed. No matter the profession, we never think about licenses, and they appear to be irrelevant.

If they’re irrelevant, why do licenses exist?

Licenses exist for a variety of reasons. The first and most obvious reason is that occupational licenses create a source of revenue for governments. The state of Indiana probably doesn’t make a killing on cosmetology licenses, for example, but I don’t think the state wants to make less money, so the state will gladly require a license for this field of work.

Another reason why licenses exist is that it helps businesses which are already in the field. Although people tend to think businesses wanted a deregulated market, that isn’t entirely true. Sure, businesses want less government interference in their operations, but they also tend to support protection from competition. Protection from competition is exactly what occupational licenses are. Requiring a license to open a restaurant protects all existing restaurants from competition. Licensing and regulations present a hurdle any new business has to clear before even becoming a business, which deters many would-be competitors.

A third reason why occupational licenses exist is because workers with licenses also support occupational licenses (but only once they’re licensed). Getting an occupational license is often expensive and time consuming. Even in cases where it isn’t, it’s still a bit of a pain to take care of. There’s paperwork involved, and nobody likes paperwork. However, while obtaining a license is no fun, it benefits licensed employees in the long run. If I’m a licensed janitor (yes, that requires a license in some cases), I benefit from licenses being required to be a janitor. If no license was required to be a janitor, there would be significantly more people qualified for my job, meaning I would have to work harder to avoid being replaced. However, with a license being required, I can put less effort into my job because I know not everybody can do my job (even though everybody knows how to use a broom).

Should we have occupational licenses?

I may be in the radical minority here, but I say no. I don’t think we should have occupational licenses. Occupational licenses present an additional hurdle for anyone and everyone hoping to enter the workforce. Additionally, occupational licenses are antithetical to a free market. If you need a license to cut your friend’s hair, you can’t seriously say our market is free.

Like I said, I know I’m in the minority on this issue. I know my readers are mostly like-minded, so you may be in the minority, too. Even if you disagree with me and think there should we should require occupational licenses for some – or most – professions, do we really need to require licenses for florists and janitors? I think we can all agree that there needs to be a line drawn somewhere, but where?

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