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.
