The latest report from the Bureau of Labor Statistics shows that barriers such as excessive state occupational licensing are thwarting opportunity for low-income workers.
Occupational licensing can make sense for some industries that require highly technical or specialized skills, but not all jobs require such knowledge or skills. Yet in many states and for many vocations, occupational licensing is required before an individual can begin work. Many of these jobs serve as a starting point for individuals. The cost in time and money in obtaining a license can be a barrier to entry—and ultimately a barrier to opportunity.
Back in the 1950s, one out of 20 workers had to receive occupational licensing before beginning work. Today the ratio is one out of every three workers.
Veronique de Rugy of the Mercatus Center at George Mason University recently wrote an article with some fascinating graphics using data from 2012 depicting the burden placed on low-income workers. The challenges still persist. According to de Rugy, most barbers and cosmetologists have to complete on average over 200 days of educational instruction and hands-on experience before being granted a license. Moreover, some 40 states require an occupational license for HVAC contractors, which require over 750 days of education and training and a licensure fee of over $200. These are services that people value and need but do not necessarily require rigorous training or costly fees.
Licensing can also, in effect, be a form of protectionism that shelters current license holders from prospective competitors. When this happens, prices rise and the quality of goods and services languish. Not only does this deprive low-income individuals of an economic jump-start, but consumers are forced to pay higher prices for goods and services. This is simply unfair.
Many are willing to work and be productive through trade and economic activity but have a significant roadblock standing in their way—a roadblock that only governments could erect.
