License to Work: Protection from Competition, Not for Consumers

 

  

 

 

Protection from Competition, Not for Consumers

 

The contexts within states, of course, are not so radically different as to warrant such inconsistent and often overly burdensome licensing schemes.  It is far more likely that the irrationalities endemic in occupational licensure stem from the personal interests of those already practicing the occupations.  More than 200 years ago, Adam Smith observed that trades conspire to reduce the availability of skilled craftsmen in order to raise wages,19 and modern public choice theory20 and social science research21 demonstrate little has changed since that time. 

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.  For example, the 2011 legislative session in North Carolina saw efforts to license music therapists.  The enabling legislation’s introduction stated:  “The North Carolina Music Therapy Practice Act is established to safeguard the public health, safety, and welfare…”22

Similarly, the American Society of Interior Designers has waged a 30-year campaign in state legislatures seeking greater regulation of its industry, including occupational licensure.23  The cornerstone of its argument is the alleged threat to public health and safety from unlicensed interior design, yet time and again industry lobbyists have failed to produce actual evidence of consumer harm.  State agencies have similarly been unable to document a need for licensing interior designers, and such claims of harm have also failed independent scrutiny.24

While the interior designer lobby has not enjoyed widespread success, it has managed to impose the most substantial average barriers documented in this report in three states and the District of Columbia (as well as less intrusive forms of regulation in a handful of other states).  And the irrationalities highlighted here suggest that lobbies in other occupations have met with greater success.

Once practitioners enjoy the benefits of a sheltered occupation, they seldom let it go without a fight.  It took multiple years and two separate lawsuits to force legislators in Louisiana, the only state to license florists, to merely reduce the licensure requirements.  In the process, representatives from the florist industry fought hard against any changes to the law.  The head of the state florist association argued that the licensure regime protected consumers by upholding high professional standards.  The head of the state horticulture commission agreed:  “If they [aspiring florists] can’t take the instruction and pass the exam, how can they do an arrangement that you and I want to buy?”25

Such arguments fly in the face of common sense—how do consumers manage in the other 49 states and D.C.?—as well as research demonstrating that Louisiana’s licensing scheme in fact did nothing to improve the quality of floral arranging.26  Nonetheless, Louisiana remains the only state to license florists, albeit with substantially less burdensome entry requirements.

In another example, the Florida legislature in 2011 considered a bill to end licensing for 20 occupations, including auctioneers, talent agents, television picture tube salesmen, ballroom dance teachers, interior designers and hairbraiders.27  But the bill eventually failed in the face of stiff resistance from industry pressure.28

These examples illustrate the power to fence out competition that concentrated, self-interested lobbies have historically enjoyed in state legislatures.  It is not for nothing that the 10th U.S. Circuit Court of Appeals once observed, “[W]hile baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments.”29

 

 

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19 Smith, A. (1776/1937). The wealth of nations. New York: Modern Library.

20 Becker, G. (1983). A theory of competition among pressure groups for political influence. Quarterly Journal of Economics98, 371-400; Buchanan, J. M., & Tullock, G. (1962). The calculus of consent. Ann Arbor, MI: University of Michigan Press.

21 Abbott, A. (1988). The system of professions. Chicago: University of Chicago Press; Abel, R. L. (1979). The rise of professionalism. British Journal of Law and Society, 6(1), 82-98; Bo, E. D. (2006). Regulatory capture: A review. Oxford Review of Economic Policy, 22(2), 203-225; Carpenter, 2008. Kleiner, M. M. (2006). A license for protection. Regulation, 29(3), 17-21; Timmermans, S. (2008). Professions and their work: Do market shelters protect professional interests? Work and Occupations, 35(2), 164-188. 

22 http://www.ncleg.net/Sessions/2011/Bills/House/HTML/H429v1.html

23 Carpenter, 2008. 

24 Carpenter, 2008; Cooke, 2000; Nettles, 1991; Roper, 1989; Washington State Department of Licensing, 2005. 

25 Finch, S. (2004, January 5). Florist licensing under attack; Lawsuit says test is unconstitutional, New Orleans Times-Picayune, p. 1. 

26 Carpenter, D. M. (2010). Blooming nonsense. Arlington, VA: Institute for Justice; Carpenter, D. M. (2011). Blooming nonsense: Licensure and consumer protection. Regulation, 34(1), 44-47.

27 CS/HB 5005 - Deregulation of Professions and Occupations: http://www.myfloridahouse.gov/sections/Bills/billsdetail.aspx?BillId=46688

28 http://www.bizjournals.com/southflorida/news/2011/03/28/interior-designers-fight-deregulation.html

29 Powers v. Harris, 379 F.3d 1208, 1221 (10th Cir. 2004).


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