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This is Perhaps the Best Part of the White House Report on Job Licenses
A welcome summer surprise from Team Obama (via the FT):
From auctioneers and barbers to scrap metal recyclers and travel guides, the number of jobs requiring a licence has been expanding rapidly across US states. Now the White House is warning that the occupational licensing requirements imposed by individual states are getting so burdensome that they are holding back the overall US economy, by lifting costs to consumers and erecting barriers to workforce mobility. In a report, the administration called on states to scrap unnecessary regulatory requirements and to harmonise more requirements across state lines, as it rolled out suggestions for better practice in the area. The White House Council of Economic Advisers, Treasury and Department of Labor report cited estimates suggesting licensing restrictions cost millions of jobs nationwide and have boosted consumer costs by more than $100bn. America’s obsession with occupational licences sits awkwardly with the country’s reputation for free market capitalism, but a quarter of US workers require a licence to do their jobs.
This is an issue many center-right reformers, including myself, have been highlighting for some time. More than once I have pointed to an Institute of Justice analysis of 100 low- and moderate-income occupations that found 66 jobs with greater average licensure burdens than EMTs, including interior designers, barbers, cosmetologists, and manicurists. The White House suggests several reforms including a simpler application process, easing exclusions for workers with criminal records, “sunrise and sunset” cost-benefit reviews, and public membership on licensing boards, but this, I think, is especially important.
Allow Licensed Professionals to Provide Services to the Full Extent of their Current Competency. When licensing is deemed appropriate for a given occupation, policymakers must also determine the boundaries of the licensed activity, or “scope of practice.” Typically, this becomes an important issue when multiple licensed occupations provide complementary or overlapping services. For instance, physicians and nurse practitioners may both prescribe medicines in some States. According to the Pew Health Professions Committee report in 1995, policymakers should endeavor to allow practitioners to offer services to the full extent of their competency and knowledge, even if this means that multiple professions are licensed to offer overlapping services.
Research suggests that restricting what nurses do raises health care costs but doesn’t improve quality. Allowing nurse practitioners and physician assistants to do more could be a key way of creating a more efficient and productive US health care system. Innovation guru Clayton Christensen:
Many of the most powerful innovations that disrupted other industries did so by enabling a larger population of less-skilled people to do in a more convenient, less expensive setting things that historically could be performed only by expensive specialists in centralized, inconvenient locations. … Take nurse practitioners and physicians’ assistants. Because of advances in diagnostic and therapeutic technologies, these clinicians can now competently, reliably diagnose and treat simple disorders that would have required the training and judgment of a physician only a few years ago. Accurate new tests, for example, allow physicians’ assistants to diagnose diseases as simple as strep infections and as serious as diabetes. In addition, studies have shown that nurse practitioners typically devote more time to patients during consultations than physicians do and emphasize prevention and health maintenance to a greater degree. But many states have regulations that prevent nurse practitioners from diagnosing diseases or from prescribing treatment that they are fully capable of handling.
Indeed, health care is perhaps the most heavily-licensed sector, and as health care grows so therefore will the share of workers needing approval to work.
Published in Economics
Hmm… Sounds sensible. Seems wildly out of character for those authoritarians.
What could those scalawags be up to?
What I dont get and I have never been able to get a lawyer to explaine is how states get away with not allowing out of state licences. They should be legally required per the Constitution to accept any job license granted by another state. From green cards to license requirements to permitting the government is making more and more jobs illegal aka a crime to do without permission from the government.
I agree with both above:
I wonder what the Obama administration is up to? Do they want to federalize these licenses so they can control them?
Why are some licenses reciprocal and others not?
Thank you for this Mr. P – I have repeatedly come to your posts arguing for a minimum wage despite the unanimous opposition of economists and this could be exhibit A as to why. It points out the hypocrisy of the commentariat; the bracing, astringent gale force winds of free market capitalism for the unskilled, but the comfortable hammock on the beach for those with enough clout to demand licenses, credentials, regulatory compliance.
Owen, you are so cynical. Those guys only want the very best for all of us.
The answer to your question in #1 is right here in Brian’s comment in #2.. The W.H. Council of Economic Advisers wants Federal control of the licensing and permitting process. They want control of individuals as all of these licenses are for individuals.
It sounds so reasonable to say that all the states should have the same licensing criteria and that licenses should be portable over state lines. The ONLY way that would ever get done is by Federalizing the process. I cannot think of a better way to get those pesky individuals, working for themselves, under the government thumb.
Unfortunately the license holders and their licensing bureaus quickly become a potent lobbying force. When politicians act on this it is almost always to the detriment of the proles and the benefit of the donor class. Anyway one cheer for BO for paying a little lip service.
In his iconic book Capitalism and Freedoom, Milton Freidman made a great case against any occupational licensing, including doctors and lawyers. Most of the licensing is just stupid. Licensing auctioneers? Really? Even assuming some regulatino of an occupation is needed, the regulation does require licensing (which typically comes with onerous pre-license enducational or experience qualifications).
This isn’t like the Democrats. The only reason I can imagine they may be doing this is that they want to follow the British health care model of hiring a lot of untrained, unlicensed people for nursing homes, rehab centers, and long-term-care hospitals.
Eliminate licensing and the costs go down. That is true in health care and in every licensed occupation. Look how Uber has made such inroads in the taxi business (and increased use) by ignoring taxi license laws.
Licensing is always sold by the myth that licensing is necessary to protect the public. The truth is that licensing always increases the costs to the public. Bad actors in any occupation get licensed, too.
The true purpose of all licensing is to protect the incomes of those who get licensed.