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Occupational Licensing ~ continued from January 2018 issue pdf page 4

Irrationalities of Occupational Licensure

So, how does this happen. The IFJ discovered that much of licensing is geared to protect existing businesses and prevent competition. In 2011, a Louisiana court struck down that state’s requirement that a seller of caskets be licensed as funeral directors. The court found “[t]he provisions simply protect a well-organized industry that seeks to maintain a strict hold on this business.

Page from IFJ report showing where DC ranks in licensing. photo—Larry Ray—IntTowner.

Page from IFJ report showing where DC ranks in licensing. photo—Larry Ray—InTowner.

If a license is required to protect public health and safety, one would expect consistency. Why do only five states license “shampooers”; is the hair or shampoo different in those five states from the other states? DC does not license shampooers.

What health and safety risks are involved with interior designers; why do only three states and DC require such a license? Many state commissions have examined this issue and recommended against the proposed licensing schemes. (Cooke, M.M. 2000, Interior Designers.)

Yet, the American Society of Interior Designers has waged a 30-year campaign in state legislatures for occupational licensure.

In 2004, the U.S Court of Appeals for the 10th Circuit (based in Denver), noted in Powers v. Harris  that “dishing out special economic benefits to certain in state industries remains the favored pastime of state and local government.” [Ed. note: The amicus brief filed by the Cato Institute on behalf of Pacific Legal Foundation clearly spells out the issues raised by this case.]

North Carolina recently licensed music therapists. Lobbyists declared this was necessary to safeguard the public health, safety and welfare.

Alternatives to Licensure

So, what are some alternatives to licensing? One idea is voluntary certification through professional associations which would benefit the workers and consumers. Then there are, third party consumer organizations such as Angie’s List, Better Business Bureaus or Mr. Handyman, Home Advisor or possibly home owners could protect themselves via insurance such as Total Home Protection. Professional association certification is another alternative.

But Mark Lee, a Washington Blade columnist and long-time small business advocate, declares, “While certification through professional associations is an alternate approach that has merit, such regulatory regimes are often not, or not always, a solution.

“Part of what motivates unnecessary local and federal government regulations are, in fact, the same motivators for professional certification boards, often government-sanctioned themselves. Both hope to benefit by creating a protectionist environment advantaging established commercial entities against smaller and more innovative businesses or individuals, while enjoying a self-serving financial interest inherent to fee-based certification requirements. This creates superfluous barriers to entry for new practitioners, most readily apparent in many personal services occupations.

“The real question is to what degree are professional certifications or licensing requirements actually necessary for consumer protection or ensuring the efficacy and performance of individuals providing services.”

Another alternative would be apprenticeships which are common in Europe often funded by the government. Colorado is one state that is promoting apprenticeships as an alternative to college degrees. If licensing is required, maybe apprenticeships should be included instead of college degrees.

DC might need to create a new commission that would examine all licenses to review whether or not are they necessary and if so, whether they overly burdensome. This commission could demand proof that there is a clear, likely and well-established danger to the public from unlicensed practice and then select the least restrictive alternative regulation best targeted to addressing it, with the IFJ’s conclusion in mind that “[f]inding a job or creating new jobs should not require permission slip from the government.”

According to Jason Washington of DCRA’s Professional Licenses Division. Some progress has been made, citing, as an example, “Braiding licenses currently cost $230 for two years and 100 training hours is the requirement before licensure.”

Conclusion

In the 1950s, one of 20 workers was licensed. Today, one-third of occupations require a license.

Graph from IFJ report showing the increase in licensing. photo—Larry Ray—InTowner.

Graph from IFJ report showing the increase in licensing. photo—Larry Ray—InTowner.

Licensing laws can lead to higher prices. Some estimates are upwards of 16%. Moreover, according to findings by the President’s Commission on Occupational Licensing, there is no evidence that licensing has any effect on increasing the quality of goods sold.

The best conclusion is to cite the Presidential Commission on Occupational Licensing’s executive summary which  posits that “. . . when designed and implemented carefully, [licensing] . . . can offer important health and safety protections. . . . The current licensing regime…creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. . . . Alternative forms of occupational regulation such as State certification, may offer a better balance between consumer protections and flexibility for workers.”

Front cover of the Presidential Commission report. photo—Larry Ray—InTowner.

Front cover of the Presidential Commission report. photo—Larry Ray—InTowner.

Most small business owners were afraid to be on the record for their comments; that is, afraid of government retaliation. One anonymous owner asserted, “We simply want the government to use deductive thinking; that is, look at the facts. Will licensing protect the public and promote safety. If so, design the least restrictive rules necessary. We do not want the government to use inductive thinking; that is, decide a license is necessary and then create reasons for such.”

*Larry Ray, a DC/Ohio attorney, teaches Employment Law, Leadership and HR for the American Management Association.

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