Does Occupational Licensing Help Us?

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It is easy to think that it would be good to get professional service from someone who is government-certified. Licensing and certification seem to add an official stamp of approval, as it were, that a person is reliable and capable of doing a job (though this may not always be the case). But a closer look suggests that we really have heavier licensing and certification requirements than are good for us.

Do licenses protect the consumer or are they driven by the special interests of industry?

It is easy to think that it would be good to get professional service from someone who is government-certified. Licensing and certification seem to add an official stamp of approval, as it were, that a person is reliable and capable of doing a job (though this may not always be the case). But a closer look suggests that we really have heavier licensing and certification requirements than are good for us.

An article from the Washington Post reports on a study that found a substantial increase in the number of licensing and certification requirements since 1950. Back then, under 5 percent of workers needed licensing (data for state level only). But a study of 2008 data done by Morris Kleiner and Alan Krueger found that the number of those who thought they either did or would need some sort of government licensing for their occupations had risen to 38 percent, or almost two in five workers.

The story points out an interesting impetus behind regulations:

“The growth in such requirements is driven in large part by industry, Kleiner says.

‘[The growth] tends to come from the occupations themselves,’ he said. ‘They organize, they pay somebody to be the head of an organization, they lobby the legislature.’

And such rules are often attractive to local lawmakers because they represent new revenue streams that typically more than pay for the cost of regulating the industry. Plus licensing was associated with 18 percent higher wages. And it creates barriers to entry and benefits those already in the profession.”

Mississippi ranks as the “18th most extensively and onerously licensed state” according to the study. Roughly half of 102  low- to middle-income occupations studied require a license in Mississippi. Although Mississippi ranks 45th for most burdensome licensing laws, a number of occupations that require licensing in Mississippi do not need licensing in more than half of other states. For instance, Mississippi landscape contractors must have licensing and two years of education/experience, though only nine other states require licensing. “Mississippi could ease the path to employment by reducing or eliminating such onerous barriers to entry,” the study concludes.

Some professions definitely do require skill and may need some level of certification for safety reasons (something specific industries could possibly determine better than government). But could too many licensing requirements slow down the Mississippi economy by keeping capable workers out of certain jobs? And is the current state of affairs hurting lower-income workers – those who need economic mobility the most?

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