Morris Kleiner writes,

There is good reason for workers in licensed fields to push for the laws. Jobs in a service-oriented economy are more likely to be licensed, which raises wages by about 15 percent, as I found in research with the Princeton economist Alan B. Krueger, the former head of President Obama’s Council of Economic Advisers. This is largely because of the ability of regulated professions working through state legislators and regulatory boards to limit the supply of practitioners and to drive up costs to consumers.

What can the Federal government do about this? Some options:

1. Require states to accept licenses from other states unless there is a compelling case that other states’ qualifications are not relevant (might be the case with lawyers, for example, because you need to know a different set of laws).

2. Strong-arm states by making federal aid for worker training, unemployment benefits, and other programs conditional on a state getting rid of anti-competitive licensing laws.

3. Pass a “right to provide service” law that permits any firm to provide a service, regardless of whether it uses licensed personnel. For services that potentially endanger consumers, require providers to undergo periodic audits to ensure that their safety practices are state of the art. Also, require service providers to obtain insurance against lawsuits for fraud or malpractice. This would lead the insurance companies regulate the service providers. Perhaps such a law could only apply to firms that do business in more than one state (I am really fuzzy on how the Commerce Clause separates state from federal power these days. My sense is that it doesn’t.)