US: Cost of occupational licenses

In a recent article, Andy Koening of Politico delves into the world of becoming a barber. The license required to be a barber in the state of Nevada now takes 890 days to acquire.

Today, these and dozens of other entry- and midlevel professions are covered by “occupational licenses.” In some states, more than 70 professions require licenses — and that doesn’t include the countless others that are licensed by local governments.

Why have occupational licenses grown so much? There are many reasons they discuss, but one of the most concerning is that some special interests want to be licensed. Last July, the White House’s Council of Economic Advisers produced a 77-page report that carefully examined the evidence surrounding occupational licensing. It said that empirical work suggests that “licensed professions’ degree of political influence is one of the most important factors in determining whether States regulate an occupation.” The logic is simple: Well-connected companies can limit competition by increasing the barriers for potential competitors to enter the industry.

The costs of these licensing requirements are borne by American workers who forgo these professions and the US. economy as a whole. A 2011 paper by University of Minnesota professor Dr. Morris Kleiner estimated that “licensing results in 2.85 million fewer jobs,” mostly in low- and middle-income professions. These burdens fall hardest on veterans, immigrants and people who run afoul of the criminal justice system.

Full content: Politico

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