Obama Sees the Light on Job Licenses
Areas where Republicans and Democrats can cooperate to advance the common good are few and far between these days, in case you haven't noticed. So the White House deserves credit for issuing a new report that focuses on one such area: the reform of occupational-licensing laws that restrict job opportunities and raise prices.
Licensing requirements have grown a lot over the years. In the 1950s, fewer than 5 percent of jobs required licenses; by 2008, 29 percent did. Two-thirds of this growth, the White House report concludes, is the result of increased regulation (rather than of more people going into fields that already required licenses).
The report expresses no hostility in principle to licensing, which it regards as appropriate in many instances. Not many people think that governments should let anyone pass himself off as a doctor. But researchers have not often found that licensing requirements are effective at improving the quality of service. They have often found that they're effective at raising prices, and reducing wages for the people they exclude. More restrictive requirements to become a nurse practitioner, for example, increase the price of a child's medical exam by as much as 16 percent.
The report is especially helpful in calling attention to two issues. First, the enormous variety in state licensing requirements -- more than 1,100 occupations are regulated in at least one state, but fewer than 60 are regulated in every state -- hinders interstate mobility. That variation also suggests that a lot of the requirements (like those for fortune tellers, say) are unnecessary.
Second, the difficulties caused by these varying licensing requirements fall especially hard on certain groups. Members of military families may have to jump through new licensing hoops every time they move to a new state. Ex-cons may face restrictions on what licenses they can get, even when those restrictions don't have any obviously good rationale. The laws can keep immigrants from doing work in which they were well-trained abroad.
Both liberals and conservatives should be concerned when regulations limit job opportunities like this -- and increasingly, they are. Last year Congress held hearings to illuminate the issue. Some states have moved to deregulate certain job categories. The libertarian Cato Institute has listed occupational licensing as one of the most promising areas where left and right can work together to promote economic growth.
In recent years, such cooperation has proven possible on low-profile issues that don't engage the passions and identities of large groups of voters. Criminal-justice reform became a bipartisan cause, for example, after crime rates and public concern about crime dropped. Occupational-licensing reform is this kind of issue. If this cause goes anywhere, most of the action will take place at the state level -- but the Obama administration will deserve credit for giving it a boost.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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