Sept. 17 (Bloomberg) -- The average cosmetologist in the U.S. trains for 372 days before earning a license. The average emergency medical technician spends 33 days in training. From this, one might conclude that Americans are obsessed with primping but tragically unprepared for emergencies.
Actually, the disparity merely confirms what a muddle the process of occupational licensing is. In 1952, fewer than 5 percent of U.S. workers required a state license. By 2006, according to a survey that year by the Gallup Organization, 29 percent of workers said they needed a government-issued license to do their job.
A study released in May by the libertarian Institute for Justice makes a compelling case that occupational licensing requirements in many states have run amok. Some licensees, including EMTs, have life-or-death responsibility. Others handle hazardous chemicals. Too many, however, are in occupations for which a natural inclination and a short apprenticeship should provide more than sufficient preparation. Why, for example, do florists, funeral attendants or shampooers need a license to work?
There is no consensus among states about which trades require licensing: Only 15 of 102 occupations evaluated by the researchers required licensing in 40 states or more. Nor does the regulatory overreach conform to red state/blue state stereotypes. Louisiana, Arizona and California subject the most occupations to licensing; Wyoming, Vermont and Kentucky the fewest. Nevada requires more than two years of training for barbers along with $140 in fees. Alabama requires nothing but a pair of scissors. One state or the other is deeply mistaken about the nature of the job.
In the Middle Ages, guilds emerged to establish quality standards for crafts, and to protect the craftsmen from competition. A similar phenomenon -- regulatory capture -- is at work in some state capitals, with occupational guilds lobbying pliant legislatures to restrict access to their fields. According to a 2009 study by the economists Morris Kleiner and Alan Krueger, an occupational license provides a wage boost of about 14 percent, roughly similar to the increase attributable to union membership.
Given the need for higher wages, especially among non-college-educated workers, such a boost may seem welcome. However, much of the work that genuinely warrants a license -- nurses are among the most commonly licensed professionals -- requires a college or associate’s degree. By imposing similarly onerous licensing restrictions on trades that are neither dangerous nor complex, state governments erect additional barriers to the prosperity of their poorest and least-educated citizens, who also end up paying higher costs as consumers of licensed services.
A dynamic economy requires regulations to keep commerce flowing smoothly. It also requires sufficient leeway to encourage small-business formation and entrepreneurship. That balance between regulation and free enterprise must be recalibrated from time to time. If it takes two years to get a barber’s license in your state, it’s time.
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