Occupational Licensing

The Obama Administration reports a sort of meta-analysis. One excerpt:

Estimates suggest that over 1,100 occupations are regulated in at least one State, but fewer than 60 are regulated in all 50 States, showing substantial differences in which occupations States choose to regulate. For example, funeral attendants are licensed in nine States and florists are licensed in only one State.

Pointer from Tyler Cowen.

I have only skimmed the report, but I did not see a reform that was suggested at dinner the other night. That is, licensing should not be delegated to boards that consist solely of incumbent practitioners.

7 thoughts on “Occupational Licensing

  1. The proposed reform is designed to undermine the obvious and corrupt self-interest of the members of a profession to insist upon rules that enrich their existing members while harming aspirational new entrants and consumers at large. But the addition of non-members to their boards does not necessarily mean that the new influence will be used to represent the interests of those harmed parties.

    I invest in a start-up that does medical research abroad (because it is simply too slow and burdensome to attempt these trials in the U.S. for all but the largest and established companies, and sometimes not even then).

    The company therefore has to interact with foreign ministries of health which in some of the countries are obliged by national regulations to follow this proposed practice of placing non-medical personnel from other government agencies on the investigative review boards that will give the permits and issue the go-aheads at various stages. The boards usually require or strongly prefer unanimity and consensus, so a single individual can easily block or delay the study.

    Now, of course I want the company to succeed as quickly as possible and so I’m biased. And I’ve only seen it a few times and have zero familiarly with local politics, and I can’t say exactly why this should be the case, or whether it would or would not be a problem in the U.S. And certainly this is not quite analogous to the professional-licensing board context.

    But it turns out it that a kind of heckler’s veto has been made in every single instance, and always by the non-medical expert on the board (there is often only one).

    And, in my judgment, this veto has always been either due to ignorance (and a stubborn unwillingness to admit that ignorance or accept evidence and reasonable argument), or bad faith (and perhaps a hint that some money might help grease the skids, which is completely impossible for a small company with possible FCPA scrutiny.)

    Sometimes agencies in these counties tend to have very different political-ideological outlooks and loyalties (and even mutual antagonisms), and these play into motivations non-medical board member to pursue an inner-game ulterior motive with his rejections or concerns.

    So, while my guess is that such a reform would probably help, it’s not an obvious slam-dunk on its face, and it’d be good to see some more supporting evidence.

  2. There is an important social component to licensing. The laborer you pay by the hour is your social inferior. The licensed electrician who comes to your home is an embodiment of The Code, in effect an Officer of the Law. You do not just need his time and skills, you require his permission — a reversal in rank effected by the license.

    • Pretty thought-provoking. I also routinely experience these people “misinterpreting” the rules so as to modify my behavior and I assume they usually get away with it.

  3. Once again, why from the WH and why now? From the section on Licensing Reforms, the following:

    “Although licensing policy falls in the purview of individual States, the Federal government can help to facilitate State reforms by providing information and resources to States. The President’s FY2016 Budget includes $15 million in new discretionary funding at the Department of Labor to identify, explore, and address areas where licensing requirements create barriers to labor market entry or labor mobility.”

    Short answer, this is none of the Federal government’s business.

    • Au contraire. Racial disparate impact is the federal government’s pretextual foot in the door for every kind of business.

      • That is the genius of it. You can never prove the negative, at least not statistically, not without at least a,lot of studies by your friends who are bareky looking for the null hypothesis.

  4. I don’t see a secret agenda here. The $15m will go to the paper’s authors in consultancy fees after they are returned to the wild. Publishing it at whitehouse.gov is just a display of transparency — people are working and thinking about stuff. Why they couldn’t pad it out by another 200 pages or so is the mystery.

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