License to kill jobs

We say the United States is the land of opportunity. And Florida Gov. Rick Scott and the Florida Legislature aspire to make Florida one of the most job-friendly states in the nation.

But are they really serious about that?

Take occupational licensing, for example. Basically, that's government permission to work in a particular field.

In the 1950s, only one in 20 U.S. workers needed a license to practice their profession, while today nearly one in three workers do, according to the Institute for Justice. On average, occupational licenses require nine months of training, $209 in fees and an exam.

The state of Florida lists 326 professions and businesses that require a license. Wow.

Allegedly those licensing requirements are there to protect you and me — the consumers — but that doesn't hold up either to common sense or analysis.

The Florida Senate, for instance, considered a bill introduced by Sen. Jeff Brandes, R-St. Petersburg, in the past session to roll back many state licensing requirements. But intense lobbying by the regulated industries reduced it to just a few changes.

There are a lot of reasons we Florida consumers and workers should be upset by this and want the Legislature to make another try.

First, let's apply some common sense. It turns out that many states do not require licenses for occupations that Florida does. It is unlikely that requiring long training, fees and testing protects the clients of auctioneers, barbers, caterers, interior designers, security guards and yacht salesmen more than their own, well, common sense would. These are not risky, technical professions. Consumers can easily judge the quality of these providers on their own.

If other states have found ways to protect consumers from harm caused by interior designers, security guards, childcare workers, make-up artists and other such professions without requiring licenses, Florida might consider doing the same.

Likewise, it is unlikely that haircutting, interior design and catering are fundamentally better in Florida — because the state licenses those professions — than they are in others states that don't require licenses. Or, put another way, it seems unlikely that consumers in all of those states that do not require occupational licenses are suffering from these and other professions, and somehow that suffering stays out of the media and away from the attention of their state legislators.

Lest you dismiss this as a crazy libertarian notion, consider that last year the Obama White House issued a report on occupational licensing that concluded that:
“Overall, the empirical research does not find large improvements in quality or health and safety from more stringent licensing. In fact, in only two out of the 12 studies was greater licensing associated with quality improvements.”

Florida's stringent occupational licensing also does not account for the negative effects this practice has on consumers. Consumers don't benefit from most occupational licensing requirements. Who benefits are those already in those professions, for whom expensive and difficult licensing requirements reduces competition and allows them to charge higher prices. In short, licensing is a form of special-interest protectionism.

Occupational licensing reduces jobs and raises consumer costs, and so should be a last resort for resolving problems in a market. By licensing so many jobs, Florida lawmakers have created high hurdles young Floridians must clear to enter careers and disincentives for skilled workers from other states who might come here and provide competition, better services and lower prices to consumers.

Again the Obama Administration report agrees:

“[T]he current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job.

“There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities and make it more difficult for workers to take their skills across state lines.

“Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as state certification, may offer a better balance between consumer protections and flexibility for workers.”

The effects of Florida's licensing requirements are even worse because they are so severe. The Institute for Justice compared the burden of occupational licensing requirements in each state — as measured by fees, training, tests and limitations — and ranks Florida the fourth most burdensome in the nation. Florida, which prides itself on being job-friendly, puts far more burdens on would-be professionals than New Jersey, New York, California and Massachusetts!

Florida needs to purge its occupational licensing. In many instances, licensing requirements can be replaced with consumers exercising choice among competing providers, which serves consumers well in so many other states. Allowing and encouraging voluntary certification by professional groups and independent ratings by business and consumer groups also can be valuable and quickly remove bad actors from the market. And requiring insurance for some occupations to cover claims by consumers if they are harmed may also provide protections in some instances.

When looking at which occupations from which to remove restrictions, policymakers should consider:

Are there well-documented and consistent complaints from, and harm to, consumers from unlicensed providers?

Is there a less restrictive option than licensing that would rein in bad acting?

Are there other states that don't license this occupation and yet don't have consumer problems?

Applying these questions would lead to opening up many occupations to easier entry, more jobs and more competition, and thus more choices for consumers. Exactly what the Florida economy needs these days.

Adrian Moore, Ph.D., is vice president at Reason Foundation and lives in Sarasota.