Occupational Licensing Destroys Jobs

by | Aug 23, 2012

Let us say that you are one of the millions of unemployed Americans. Unable to find a job, you decide to start your own business. Perhaps you’ve always done your own home repairs and decide to offer a handyman service. You start installing ceiling fans, replacing leaking faucets, and painting bedrooms. Your customers love your […]

Let us say that you are one of the millions of unemployed Americans. Unable to find a job, you decide to start your own business. Perhaps you’ve always done your own home repairs and decide to offer a handyman service. You start installing ceiling fans, replacing leaking faucets, and painting bedrooms. Your customers love your service, but state officials swoop in and threaten you with prosecution for performing electrical, plumbing, and painting services without a state issued license.

Or, perhaps you decide to offer taxi services to your elderly neighbors. You ferry them to doctors appointments and the grocery store, and everyone is happy with the arrangement. Everyone, that is, except for your city’s tax regulators, who threaten you with fines for operating a taxi service without a license.

Or, maybe you decide that you will cut hair. The neighborhood children love your funny stories and their parents love your prices and service. But the state’s cosmetology regulators aren’t so enamored—you are operating a business without the proper state permits.

Rather than sit idle, collecting unemployment and whining about the state of the economy, you decided to take matters into your own hands. You decided that you would create your own job and take responsibility for your situation. But because you have not obtained the proper permissions from government officials, you become a criminal.

This may seem like some kind of Orwellian nightmare, but it is a situation faced by millions of Americans. Across the nation, more than eight-hundred different occupations require some form of government licensing. Which means, before you can ply the trade of your choice, you must satisfy government bureaucrats that you are competent. To do so, you must attend state mandated courses, perhaps serve and apprenticeship, and pay an assortment of fees. Your judgment, and that of your potential customers, is irrelevant. Your future lies in the hands of some pencil pusher whose job consists of making sure you dot fill out the proper forms.

The alleged purpose of these occupational licensing laws is to protect consumers from incompetent practitioners. The implication is, consumers aren’t smart enough or wise enough to judge the quality of your services. Your customers are not rational enough to determine if their ceiling fan works, or you are taking the long route to the doctor’s office, or their haircut looks good. Instead, some bureaucrat will decide for them whether you are qualified to even offer such services.

In each instance, you saw a need that was being unmet. You decided to meet that need, offering your services for a fair price. Your customers appreciated your service and willingly purchased it. You became a criminal even though you violated nobody’s rights. Your “crime” was a failure to secure government permission. And often, your customers also become criminals for hiring you.

Of course, nobody wants to hire an incompetent electrician, or pay excessive prices for a taxi ride, or get a bad haircut, much less discover that their surgeon has no medical training. But abolishing occupational licensing laws does not mean that consumers will be thrown to the wolves. It means that consumers must take responsibility for their decisions. And there are many ways to do this.

Consider the popularity of services such as Angie’s List. This service allows consumers to find service professionals based on the recommendations and experiences of other consumers. Similarly with the Better Business Bureau. Certification programs, such as those offered by product manufacturers and trade organizations, offer verification of a practitioner’s competence.

You have a moral right to offer whatever products or services you choose (as long as doing so does not violate the rights of others). And consumers have an equal right to purchase your products or services if they so choose. Voluntary trade to mutual benefit is the essence of a free market. Licensing laws prohibit such trades, forcing practitioners to meet the demands of bureaucrats rather than the market; they force consumers to deal only with state-approved practitioners, no matter their own choices and preferences.

While politicians from both parties talk about creating jobs, they ignore the job-destroying nature of licensing laws. Certainly, policies emanating from Washington impact everyone, but those coming from your state capital can be just as destructive.

Brian Phillips is the founder of the Texas Institute for Property Rights. Brian has been defending property rights for nearly thirty years. He played a key role in defeating zoning in Houston, Texas, and in Hobbs, New Mexico. He is the author of three books: Individual Rights and Government Wrongs, The Innovator Versus the Collective, and Principles and Property Rights. Visit his website at texasipr.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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