Study Shows Govt Licensing Kills 31,000 Jobs & Costs Consumers $2 Billion – In 1 State Alone

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by Justin Gardner

When we talk about declining jobs and economic burdens, the narrative conditions many to blame some “other” political or cultural group. But perhaps the least talked about threat to jobs comes from the government itself in the form of occupational licensing.

A new analysis from the Wisconsin Institute for Law & Liberty (WILL) found that in Wisconsin alone, the rapid expansion of licensing requirements over the past 20 years caused 31,000 fewer jobs to be had, and cost consumers almost $2 billion.

The study, the first of its kind to examine the economic and social impact of the more than 240 different types of credentials issued by DSPS, shows a dramatic surge in the number of regulated occupations and license holders.   Across the country, a bipartisan consensus – from the Obama White House to the Koch Brothers – has formed that occupational licensing is arguably one of the most substantial barriers to opportunity in America today. While some credentialing serves to protect public health and safety, much is rank protectionism – a device to “fence in” those who already have permission to work and “fence out” those who do not.

As this writer posited earlier this year, government licensing is just another extortion racket with no real purpose in making things safer or better.

These licenses involve paying government to take some sort of test and/or provide documentation of state-approved training, and then paying government every year—at steadily increasing rates—until you quit, retire or die.

The notion of being licensed may sound nice to people looking for a service, and the basic idea of demonstrating knowledge about a trade is good. But mandatory government licensing can be described simply as extortion rackets with no real purpose in making things safer or better.

Even in a profession that can be dangerous to others, such as repairing gas leaks, the constant money shakedown from government has no bearing on the safety of such professions.

As the Institute for Justice (IJ) explains, it is not about protecting consumers, but protection from competition. Government licensing is a joint effort made possible by “the personal interests of those already practicing the occupations” and the state’s thirst for control — just another part of the corporatocracy.

Occupational practitioners, often through professional associations, use the power of concentrated interests to lobby state legislators for protection from competition though licensing laws.  Such anti-competitive motives are typically masked by appeals to protecting public health and safety, no matter how facially absurd.

In 17 states, African hair braiding requires a cosmetology license which costs $5,000-15,000 and thousands of hours of classroom training. In Wisconsin, government absurdly requires licensing for things such as auctioneering, beekeeping, selling Christmas trees, dance therapy and peddling ice cream.

Since 1996, according to the WILL report, the number of occupation licensing categories in Wisconsin has ballooned by 84 percent. Licensing puts an average $754 burden on the households in that state; nationwide, the burden is up to $1,600 per year for the average household.

The WILL report comes just in time for the January legislative session in Wisconsin, where several in the Assembly “seek to eliminate licenses in Wisconsin that do not provide legitimate public safety benefits.”

Dedicated campaigns carried out by organizations such as WILL and IJ have forced the issue to the attention of state lawmakers. Lawsuits are having success at forcing authorities to back down from pointless licensing requirements that obviously serve only to protect industry monopolies and raise revenue.

Case law has spelled out, quite simply, the farce of licensing, such as Murdock v. Pennsylvania, 319 U.S. 105: “No state shall convert a liberty into a license, and charge a fee therefore.”

Another issued a clarion call in the fight for freedom.

“If the State converts a right (liberty) into a privilege, the citizen can ignore the license and fee and engage in the right (liberty) with impunity.” (Shuttlesworth v. City of Birmingham, Alabama, 373 U.S. 262)”

There are other ways to achieve the goals of licensing without the State extortion racket, as IJ explains.

Certification, especially certification by an independent third party, can give consumers justifiably heightened confidence in a service provider without imposing licensing restrictions that stifle entry into an occupation, which limits competition and drives up prices. What’s more, such voluntary certification can be coupled with online reviews and recommendations to further guide consumers to the best service providers.

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Contributed by The Free Thought Project of thefreethoughtproject.com.

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  • Rey d’Tutto

    So, basically, the consumer is better than the government when it comes to regulating markets…
    Who’d a thunk it?

  • During our careers as real estate agents, brokers and appraisers we saw intrusive government efforts to license real estate activities under the guise of ‘professionalizing the industry’. We spoke against these ‘well intentioned efforts’ because we understood you either understand real estate and value, or you don’t.

    Today, tons of licensed professionals have credentials that fill office walls, but they don’t have even the vaguest clue about the business or what it means to serve the customer and provide real value.

    Licensing and continuing education have made a lot of people wealthy, but it’s failed to served the customer or industry one twit.

  • Altheroque

    I am in the heating and ac business… when I lived in Florida everything was over regulated. The problem was that those who had licenses and were law abiding had something to lose if they weren’t going to run their business honestly. And the state would yank your license and fine you in-a-heartbeat, but the state would not go after anyone breaking the law by doing ac work without a license. A neighbor of mine lost her home to a unlicensed contractor when he incorrectly hooked up the high voltage to a new ac system he was installing and her home burned down. He had no insurance and no property for her to go after and when her insurance company found out she used an unlicensed contractor they refused to pay her claim.
    In Florida the distributors are not supposed to sell ac systems to unlicensed contractors.
    Now I live in Mississippi… the state requires licensing but allows anyone to purchase ac equipment which opens up illegitimate contractors advertising on Craigslist and selling and installing ac equipment… endangering consumers like the woman in Florida but also not warrantying their crappy work.
    What I am trying to say is we honest people will always feel that over-regulation is stifling and therefor unnecessary, but I tend to lean towards the state requiring licensing. If they would just enforce the laws consistently.

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