Occupational Licensing and the Earnings Gap

by James A. Bacon

Many reasons are proffered for the increasing earnings gap in the United States, running the gamut from globalization and automation to the breakdown of the family and the failures of the education system. Here’s another contributor to throw into the pot: the steady rise of occupational licensing.

Think of occupational licensing as the white collar’s answer to labor unions. Licensed occupations don’t engage in collective bargaining or go on strikes, but they do lobby statehouses around the country to erect barriers to entry in their profession, thus restricting competition and enabling members of the profession to maintain higher earnings than they could in a more open labor market.

Occupational licensing has risen in direct proportion to which trade unionism has declined. In 1950, only 5% of the United States workforce belonged to occupations requiring a license. In 2006, 29% of the workforce did. (Click on chart for more legible image.) Additionally, licensing requirements have tended to become more restrictive over time.

Occupations include almost every profession associated with health care and extend to work as obscure as African hair braiding and Asian eyebrow threading, writes Courtney O’Sullivan in an issue brief for the National Center for Policy Analysis. She concludes: “Many jobs could be performed by unlicensed individuals at a lower cost, without sacrificing safety or quality. Licensing decreases the rate of job growth by an average of 20 percent and costs the economy an estimated $34.8 billion to $41.7 billion per year, in 2000 dollars, reports the Reason Foundation.”

Cosmetologists defending their occupational turf doesn’t contribute measurably to the wealth gap but physicians, lawyers, physical therapists, optometrists and other higher-end professions defending their turf does. Just one more example of how the rich and privileged wield the coercive power of government to stay rich and privileged.

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6 responses to “Occupational Licensing and the Earnings Gap”

  1. unfortunately this is yet another example of a generalized attack on an entire practice without giving examples of where it is probably needed and where it is probably not….

    I see no shortage of haircut or tattoo establishments and call be crazy but every time I receive an xray, I check to see the certificate…. because while I trust my Dentist.. I doubt seriously that he’d pay to have the unit checked near as often as the law requires that it be.

    Do you want your hair cut by someone who has a communicable disease?

    do you want teachers licensed or not?

    do you want the guy who adjusts the traffic signals certified to do that job?

    do you want school bus drivers to have CDLs?

    I could go on and on but the steady libertarian/right wing anti-regulation drum beat serves no real purpose because it generalizes and demonizes the entire discipline… attacking the fundamental basis rather than over-the-top abuses…

    it’s your basic anti-govt propaganda… in my view…

  2. on the same track….

    what does “Board Certified” mean and perhaps as important for those who might question licensure… do you believe that a Doctor that is “board certified” is more qualified than one that is not – given the fact that Board Certification is not a govt process at all but rather a private approach.

    How about PE for “Professional Engineer” which is a govt requirement…

    do you want a PE designing that bridge you use or whoever the contractor decides is willing to do it for the cheapest salary?

    Do you want your Dentist taking a scalpel to your gums with only the requirement that he himself says he knows how to do it?

    I agree.. at times it seems like it gets out of hand… but the core principle is not disputed by most reasonable people.

    We simply must have a method to determine the fitness of occupations that have the potential to harm people….

    so.. in my usual capricious style – I’d ask those who think licensure has gone too far – to name some examples of where it is required but there is scant chance of poor skill in harming others…

    name the jobs that require licenses that have little effect on health and safety…

    on those – once you name them – I’ll probably agree with you…

  3. Larry:

    Morganovich and Juandos are a trip, no?

  4. yup… but as long as they are civil.. it’s ok….

  5. yup… but as long as they are civil.. it’s ok….

  6. yup… but as long as they are civil.. it’s ok….

    interesting that Bacon and Perry are attracted to the same source material…

    editorial comment: ” Proudly powered by WordPress.”

    ha ha ha ha ha bahahahahahaha

    this piece of crap would be flattered to be called ‘geekware”

    Blogger had it’s problems but this thing make blogger look bulletproof!


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