By Dr. Ed Timmons, Special for USDR
As technological advancements expedite the shift of the U.S workforce to service-based jobs, an increasing number of commentators warn of an impending “world without work.”
What is truly concerning, though, is an underlying—and often undetectable—threat that has developed in the U.S. labor market in correlation with this shift: occupational regulation.
To put it into perspective, in 1950, just 4.5 percent of the U.S. workforce was directly affected by occupational licensing. Today, nearly 30 percent is directly affected by occupational licensing—and the figure is expected to grow.
In fact, in a recent article that I co-authored with Lehigh University economist Robert Thornton, we uncovered only eight instances during the last 40 years of licensing legislation having been successfully eliminated.
While limited progress has been made—Indiana recently established a framework that recommends certification as opposed to licensing, Michigan removed existing regulations for several occupations, and some states now provide cosmetology license exemptions for hair braiders and eyebrow threaders—an overwhelming number of occupations (1,000 at last count) are currently regulated, certified, or licensed by states throughout the country. And for many licensed occupations, entry requirements have stiffened over time.
Most recently, Native American tribes in Alaska have come under heavy fire by the American Dental Association and its local dental societies for hiring and training more than 30 dental therapists to complete simple procedures such as cleanings, filling, and extractions for the underserved community.
Since many dentists fail to accept Medicaid due to low rates of reimbursement, it can be incredibly difficult for the underprivileged to seek care. However, despite the fact that 68 percent of Native American adults have untreated tooth decay and Native American preschoolers have four times more cavities than white children, the ADA has fought tooth-and-nail to prevent the additional hiring of dental therapists.
A number of other medical professions have also built steep barriers to access throughout the past 30 years.
In the 1980s, it was relatively easy to find employment as a registered nurse by completing a non-degree program at a local teaching hospital. Today, an increasing number of hospitals require nurses to obtain a bachelor’s degree in an effort to achieve a “magnet” designation, which hospitals can use for marketing purposes for prospective patients and employees.
Effective this year, physical therapists are required to complete a doctoral degree. In the near future, nurse practitioners and physician assistants will most likely be required to complete doctoral degrees as well.
These regulations are proposed as a means of public protection, but opponents make the argument that such licensing requirements result in rent-seeking behavior by professionals. Manipulating licensing laws to restrict entry into a profession results in higher prices and restricted access to services, which leads to a decline in public welfare.
Advocates argue that licensing laws protect the public by alleviating “asymmetric information”—a situation where buyers of a service have less information about the qualifications of a professional than the providers.
Indeed, licensing requirements for very specific, high-risk professions is defensible. But not for the aspiring music therapists in Oregon, florists in Louisiana, and interior designers in Florida, Nevada, and Washington, DC, who must all obtain licenses before handling their first pair of scissors—or plucking the strings of a guitar.
Unfortunately, burdensome regulations such as these have become far too common in the United States, and there is little evidence that they actually improve societal well-being.
Previous reports that have examined the effects of occupational licensing suggest such regulations substantially increase prices for consumers while only marginally increasing wages for practitioners. Consumers are generally unaware of the debilitating costs associated with occupational licensing and, in turn, present little opposition.
With regard to consumer safety, there is scant evidence that occupational licensing enhances the quality of services delivered to consumers. In fact, occupational licensing limits competition by excluding major providers of a service from the market, thus reducing the quality of service and consumer safety.
Unfortunately, history tells us that there is very little reason to believe that state lawmakers will scale back occupational regulation anytime soon. Why? Occupational licensing laws generally create new revenue for state governments as a result of the various fees charged to aspiring practitioners.
As long as certain professions push against deregulation, workers will continue to incur needless costs in order to obtain gainful employment.
Rather than fear an American economy that is doomed to a future without work, perhaps we should fear a government that continually makes it harder for workers to simply enter the job market.
The most terrifying presentiment is of a society in which qualified professionals are unable to overcome burdensome requirements and consumers are forced to pay the price with little measurable benefit.
Dr. Ed Timmons is Associate Professor of Economics at Saint Francis University in Loretto, Pennsylvania. His research focuses include occupational licensing, teen smoking, and labor & health economics issues. Dr. Timmons is also a co-author of a recent comprehensive overview that examines and analyzes de-licensing efforts which was featured by the Bureau of Labor Statistics, the Washington Post and Daily Caller.