Where is the licensing burden heaviest?

Adam Ozimek reports:

…consider the Institute for Justice’s excellent report on occupational licensing. The top 10 worst ranked jobs in terms of average licensing burden are as follows:

1. Preschool teacher

2. Athletic trainer

3. Earth driller

4. Cosmetologist

5. Barber

6. School bus driver

7. HVAC Contractor

8. Skin Care Specialist

9. Pest Control Applicator

10. Bus Driver

And from Virginia Postrel on Twitter:

Sting catches Charleston rickshaw driver giving illegal tour, $1,092 fine for talking history w/o a license http://buff.ly/1cTeo02  @ij

Here are previous MR posts on occupational licensing.


I wonder how they define "average licensing burden" since things like "medical doctor" don't figure on that top ten list.

Nor certified public account ( http://en.wikipedia.org/wiki/Certified_Public_Accountant ) or civil engineer ( http://en.wikipedia.org/wiki/Regulation_and_licensure_in_engineering ).

Especially considering that I don't believe that being a bus driver requires a minimum of several years of specialized university level education.

From the first page in the linked report: The report documents the license requirements for 102 low- and moderate-income occupations—such as barber, massage therapist and preschool teacher—across all 50 states and the District of Columbia.

It's a noble goal but I think they are focusing on the wrong end of the spectrum. I'd worry less about professions demanding a 6 month course and a $300 fee than about something like the Medical Boards that legislate money and time requirements that are orders of magnitude higher.

Yeah, economists who do studies saying that the lower middle class is unfairly protecting themselves from the market are going to get WAY more traction than economists saying the rich are doing the same thing.

I'm honestly curious - do you think the legislatures and boards that create the regulatory framework are from 'the lower middle class' and are 'unfairly protecting themselves from the market.'

@prior: It's actually a pretty basic public choice problem and has nothing to do with legislators actually being barbers or interior designers. The fact that a commenter here waves away the licensing burden as a "6 month course and a $300 fee" suggests that most people don't think too hard on the issue, but I assure you that those who are in these occupations don't want the barriers to entry lowered.

Economists should be licensed before they can do studies.

@prior: No, nor do I think the legislatures and boards who regulate the banks are billionaires. But the system is set up so special interests, whether bankers or barbers, can get those people to grant them special protections and favors. The barbers defend their protections by number of votes, the bankers do it with money.

I think there's a philosophical point being made. When the people need permission to conduct commerce, they are not citizens, but subjects. There's at least a public safety issue with licensing doctors or school bus drivers. There's no earthly reason to regulate cosmetologists and barbers.

Sorry, but if you work on people with sharp instruments, you need training in proper sanitation practices and the state needs a means of enforcement. Shaving customers or nicking them with scissors that are improperly sanitized can spread HIV, Hepatitis C, etc. I've actually had to stop a barber as he pulled a straight razor out of his pocket, dipped it in Barbasol for the briefest possible moment, flung the drips off, and approached me with it.

The barber you stopped, he had a license, didn't he?

Actually, from the first sentence - 'License to Work: A National Study of Burdens from Occupational Licensing is the first national study to measure how burdensome occupational licensing laws are for lower-income workers and aspiring entrepreneurs.'

So, CPAs and civil engineers are by definition not aspiring entrepreneurs when setting up their own businesses/bureaus?

And from the third paragraph of the link - 'On average, these licenses force aspiring workers to spend nine months in education or training, pass one exam and pay more than $200 in fees. One third of the licenses take more than a year to earn. At least one exam is required for 79 of the occupations.' The CPAs and civil engineers are likely wondering how they could get such a great deal - well, except they are highly paid for accepting a much higher burden.

The authors this study would probably have an attack of the vapors if they looked at such burdens in Germany. Of course, the problems this cause the German economy can be seen in its current economic statistics.

One difference here is that occupational licensing for doctors or engineers is addressing a real, known, very bad potential problem. A quack doctor can kill you through incompetence and ignorance; a quack hairdresser can really only leave you looking bad.

But one of the problems with that is that a quack doctor with a license can still kill you.

Yup, can't do any possible damage with bleach, colors, relaxers, or any of that stuff.

A quack auto Mechanic can kill you. A quack plumber or electrician can kill you too.

Beat me to it. That was my first thought. I suspect it attempts to link cost to justification for the cost.

Obviously too deep a thought for this crowd.

How many on the list make a living wage from their endeavors?

Since I'm in the industry, I'll describe what an HVAC contractor needs. Each jurisdiction does it differently.

Gas license. The workers need certification and the contractor needs a license that includes a bond. The contractor license is yearly, the trade certification needs renewal every few years.
Refrigeration license. Here we are under the Pressure Vessels Act, and it is a regulated trade and contractors need a license. Contractor license yearly, and the workers are certified.
Electrical certification. Every jurisdiction does this differently, ours is included in the other certifications. Some have to get and maintain an electrical contractors license as well as worker certification.
Ozone Depleting Substance handling. The EPA in the US and the canadian provincial regulations apply. It is a renewable certification so you can buy and handle refrigerants.
Since we transport these things in our work vehicles, Transporation of Dangerous Goods or equivalent applies as well. Some jurisdictions require a renewable certification. We don't but we have to know how to avoid problems.
Whmis training. Again jurisdiction dependent. A renewable certification that is required some places. Often required by customers who are regulated.
Sheet metal workers are a certified trade in some jurisdictions as well.

Each renewable license costs anywhere from $100-200, and the length of terms vary.
Installations of various things require permits, you pay before you start, as well as inspections and the like.
We have the usual that applies to everyone on top of all this. Provincial and GST tax collection, Worksafe BC, municipal business licenses, etc.

Especially with residential work non certified contractors can do the work for substantially less. A funny story. A few years ago the BC Safety Authority, the government regulatory body in the province, was trying to get refrigeration contractors to pull permits and the like. My employer said he would start doing so if the units being installed on the roof visible from our office had permits pulled, and could he see them please. We knew who was doing them and they couldn't pull permits, they weren't certified. The inspector threatened to pull our contractor license if we didn't comply. My employer said go ahead, then you will leave us alone to do our work just like the guys we are watching across the street.

The only limit to the growth of the bureaucratic state is the growth of underground economy. If a fellow installs a furnace without a permit he probably isn't paying taxes either. If the regulatory cost makes it substantially cheaper to not comply, something akin to the Laffer curve will start to occur. I suspect that the large number dropping off the unemployment stats are doing that very thing.
If someone wants a deal I usually say politely to go screw yourself.

Darn, the formatting disappeared. I apologize for the amorphous mass of text.

Enjoyable to read.

Obviously all this red tape is worse in Canada than i the U.S. USA, USA, USA!!!

Thank goodness policemen are finally cracking down on the unlicensed history tour guide scourge that's been plaguing this country...

Plaguing this country? No. He was in violation of city laws that were set up to deal with a local problem in downtown Charleston.

That problem being free competition?

What folks sometimes forget about licensing is that you can give an endorsement -- if the city of Charleston wants to give a "WE APPROVE OF YOU!" sticker to the tour guides that take their test, it can. That's different from prohibiting the sale of tours by anyone who hasn't paid the city to be able to do so.

How is this not a denial of freedom of speech? You're not allowed to talk to someone about things you pass as you transport them across town? Doesn't almost any visitor to a town who takes a cab talk to the cabbie about the place (if they can)?

Licensing requirements for some of these seem ridiculous. Depending on what exactly the requirements are, I think preschool teachers probably belong on the list.

As would people who work with toxic agents (pest control) or are responsible for the lives of passengers (bus drivers).

And I guess that drivers of hazmat cargoes are not in the low to moderate income bracket either, as they too undoubtedly face a major burden in terms of licensing.

in America, drivers handling hazmat cargo do have special training, depending upon the material. it is part of obtaining and keeping a commercial driver's license.

Most of the trucking companies I work with not only pay for their drivers' hazmat cert class and maintenance, but they also pay the drivers bonuses (I've heard $50 or $100 per week) to maintain it. The major cost is hazmat carrier insurance. Then I, as the customer, pay for it.

What I hate about the growth of occupational licensing it is how it constrains ordinary enterprising independent-minded people from exercising initiative to build and create things on their own instead of paying someone else to do it. I'm lawyer by profession, but twenty years ago I built my house with my own hands, including the electrical, HVAC, plumbing, sanitary system, etc. Everything. Obviously I saved a lot of $$ doing it that way, and also ended up with a home that I love. I don' think it would be possible to do it today. Now, the sanitary system has to be drawn up by a PE and put in by a licensed installer. Even if you have the ability to put in your own HVAC, you can't simply buy a furnace from a dealer unless you can produce an HVAC license. The examples go on and on. There's no need for it. Almost everything about building a house is manageable by an average person if they have the basic tools. It's shameful to erect obstacles to such pursuits.

Read "The Right to Useful Unemployment and Its Professional Enemies" some years ago, which might get me laughed at here, but it's spot on about these things. He notes that only the very poor (cardboard box) and very rich have the right now to build a home for themselves. Of course, this was thirty, forty years ago. . . .

In most other areas, you can do-it-yourself. You can cut your own hair (flowbee does not require a license), decorate your own house, apply your own makeup, lift your own weights, teach your own kids, drive your own kids to school, kill your own roaches, and dig your own fenceposts. As much as I hate credentialing generally and occupational licensing more specifically, people entering these professions seem to like the validation that comes having formal licensing requirements. If anything, the existence of a formal training and licensing program encourages rather than deters new entrants into these sorts of low-level jobs.

"people entering these professions seem to like the validation that comes having formal licensing requirements. If anything, the existence of a formal training and licensing program encourages rather than deters new entrants into these sorts of low-level jobs."

Quoted for being genuinely insightful contribution to the discussion.

Doesn't Sting have better things to do than be a historical-rickshaw-tour-license vigilante in Charleston?

Every step you take...he'll be watching you.

Too many chuckles were had when I read these!

I think it's a whole problem on the rich end of the spectrum, too, but if you've never tried to do any of the stuff on that list without the government's stingy permission you really have no idea. It's insane, and it's completely discouraging to small business. Preschool is an excellent example, we're not talking just fingerprinting for background check and zoning laws about neighborhood traffic, that's reasonable. Google it for your state, what it takes to teach kids to fingerpaint a couple hours a week. It's true that it's nothing like what doctors have to go through, but for the gain the cost is almost completely not worth it. Either you change your business model (make it more daycare, larger numbers, more revenue to make up for the costs of keeping up with regs) or you drop out altogether, because if you only intend to work 10 hours a week anyway, putting 3 hours a week into regulation compliance is ridiculous. Also, if you are running a small business out of your home, you have the extra fun of knowing someone with this hyperregulatory mindset could drop by your home any time with a checklist. Not worth it.

Meanwhile, we now have full time kindergarten and preschool and afterschool programs in almost every elementary school in the country. And it's not just the regulations that semi-enforce this public monopoly, it's pricing -- many of the preschools are now free, meaning paid for collectively. In our rural county, the school provides a free preschool that's petty meh, but it's the only game in town because no one can justify a family expense when they can get the milk for free.

It's a whole small business sector that the government has largely forced out of private hands. And there's really no justification for it, it's not like I can't tell if my kid's preschool teacher is doing a "good job" of teaching her what a butterfly is, for crying out loud. I need quality control from the state for that?

This is a very apt example. My wife did it for a few years in CA and I was amazed at the regulatory requirements.

It's a mess. But it doesn't seem like there are any politicians who want to touch this issue with a 10 foot poll. Most of them come from a protected occupational job themselves. If they go after one occupational license they're stirring up a hornets nest because the others know you'll be after them next. Professionals, Unions and the general public will all be their enemies.

The promoters of occupational licensing have a great public image, they are protecting people's "safety" and providing "quality" and people really believe that. Try posting a comment in a public forum saying that something might be screwy with the path people have to take to become doctors!!

People may talk about the industry protecting itself with regulation, but I think a lot of regulation is due to demand by voters. Many of the occupations can, at the extreme edges, have catastrophic consequences if it's done wrong. When that happens, if it catches media attention, then the public wants something done to make certain this can't happen again.

What can politicians do to prevent tail events from happening again? Well, in many cases, not much. But they can *appear* to do something by regulating. Moreover, the populace in general seems to have a strong preference to *not* have to go to the bother of checking reputation to determine at least minimum competency, and while licensing doesn't doesn't remove the risk of hiring someone with no competency (or an outright scam artist), it almost certainly lessens it.

So, I'd say that the blame for extra licensing mostly lies right where it belongs, with the majority of the populace who want it and are happier with it (and the politicians who give the populace what they want.)

Yeah, but nah.

The general population really likes the idea that a combination of regulation and liability make them pretty safe.

This is used by groups to push their own agendas, a version of "it's for the kids". So, yes, the voters play into this, but they don't drive the train.

Our state legislature, bill being proposed (hopefully won't reach a vote) would require doctors to report to the state anyone diagnosed with a condition that could cause lack of consciousness (yeah, nice and broad like that -- any potential for loss of consciousness). The patient will then get his license automatically revoked and have to appeal to get it reinstated.

Definitely sold to the public on the grounds of public safety.

But if you read down the law, you see the deal -- doctors who report have liability waved in the case of an accident with the patient. So, it's about CYA for the doctors. Of course, they could have just provided the CYA instead of attaching a reporting clause, but then it doesn't look like they are protecting public safety.

It winds around. Groups know how to get from the public what they want.

I agree. There's a tendency after every little crime or accident to have a knee jerk reaction that tries to legislate away the problem.

Mary gets electrocuted by a faulty AC and we get "Mary's Law" mandating onerous licensing for HVAC techs. Jack gets molested by a cable TV installation guy & we will get "Jack's Law" requiring background checks & state permits for all home installers.

Insight's Law: Any law with a name in it is a bad law.

Not mine.

Yours is the worst, Murphy, don't even pretend.

I doubt demands of the voters has much to do with any of this. Two examples: (1) a few years ago the CA legislature passed a bill that forbade electrical contractors from hiring anyone who was not in a four year apprenticeship program. It stipulated that the only apprenticeship programs that would fit the bill were those already existing, that is, one could not either alone or mutually with other contractors set up a new program. Each apprentice would need licensing. The law was written & financed by the electrical unions- IBEW & NECA solely to counter non-union activity. In the 90 years under the previous system there were few problems. (2) In 200 or 2001 Arizona passed a regulating, licensing law to cover home inspectors. It stipulated that to be licensed one needed somewhere in the neighborhood of 80-100 completed inspections which could only be obtained by apprenticing under an existing home inspector, all of whom were members of a created association of home inspectors and who were miraculously grandfathered into the new law. The requirements written into the law were written by the association. Most egregiously, experience in building construction was has no value as experience and conversely no experience in the building trades is necessary for licensing. Such a badly written law can not be the result of consumer complaint.

The code book that I work under is a series of rules written in response to events. One of my instructors told of a situation he was involved in as manufacturers representative. He wrote up a report describing the event, and a year or two later a rule was added to prevent recurrence.

Essentially these rules become best practices in an industry. But from there is piled the regulatory structures, the fees, inspectors, the agencies of government protecting incumbents or going far beyond the need for some safety standards.

I will just wildly guess that the average person is harmed more by the barriers to entry that create 300k doctors than the ones that create 40k preschool teachers.

I don't think there are any preschool teachers making 40K, unless they work for public schools.

Because of the barriers to entry.

But I thought you said above that most every public school now has a pre-school addition, and that in your county the public preschool is the only game in town? Wouldn't that mean most of the teachers are "public" preschool teachers?

Yes, that's what I mean. My point was that the harm at that end isn't the cost of the service to the consumer in cash so much as the cost in freedom. It was an awkward point.

Hard to say. Medical and legal licensing raise the prices they pay for services or price them out entirely. Occupational licensing of the sort here both raises the price they pay for services and prevents some portion of them from getting a job or running a small business.

The Board of Accountancy in some states (texas is one I think) do not permit a non-CPA to use the term "Accountant" to advertise their services. You can spend a lifetime with all the Accountancy degree qualifications and a career in Accounting , and hold a CMA (certified Management accountant) certification, but you are not an "Accountant"!

Texas also had very stringent regulations regarding who can call themselves an "engineer". For a while you couldn't legally call yourself a "software engineer" in Texas because that discipline didn't fit into their regulatory regime.

What exactly is a "Software engineer"? I've always wondered what separates him from say a programmer or a systems analyst?

What about lawyers? A reasonably educated and intelligent person can spend sometime in the library reading Lexus Nexus and handle most of the transactional legal work and civil cases

Mostly self importance.

As far as degrees go, some places might give you a software engineering degree because you spent more time working on software architecture or took some more classes on development methodologies.

But when rubber meets the road, you will find very few people that are any good at software architecture that aren't good at just writing code on their own, and vice versa.

System's analysts are a different breed altogether, and 90% of the time, you'd get better results by replacing them with an experienced programmer. A secret of software development is that many changes, from beginning to end, are rather simple. So you are far better off with 5 guys that are pretty good at doing a variety of tasks than with a specialized Programmer, Tester, DBA, Business Analyst and Architect, who just can't do anything outside of their realm. The specialists have to spend way too much time tasking things out, and they either need everyone to be part of said tasking discussions, or have a single point of failure in the person dividing out the tasks.

Back in the 60's I encountered in the licensing statutes of a southern state:


". . . and shall include any person who manipulates a bosom; whether or not for profit."

If you cancel the requirement for a hairdresser certification how loudly would hairdressers protest? OTOH, if you dilute state licensing rules for say dermatologists how strongly would they protest?

As a farmer, I'd REALLY like to draw attention to pesticide applicators. As an example, if you have some weeds in your driveway, you go to home depot and buy some round up and spray them dead. As a person w/ a Pest.App.Lic, I, to use that EXACT same product for the EXACT same purpose, need to
i) put up adequate signage in the area of application
ii)have a 24 hr "no entry" period
iii) keep EXACTING details, showing precisely how much i used and where. I need to keep these for 7 years. If I am audited at year 6.5 and don't have them, I lose my licensure, and effectively my output.

@farmer, I can see where the spirit of the law is intending good things. I suppose the onerous part is the 7 year record retention?

I confess I did not read the linked report, but I think many of you, in comparing the training costs of doctors versus cosmetologists, are missing the point. The question is the burden of licensing. The burden for doctors and CPAs of licensing is not that great, because all of their training is necessary just to learn what they need to in order to be competent. So the cost attributable only to licensing is small. On the other hand, a hairdresser can pick up the skill in a few weeks, but to get a license she has to have something like 1,000 hours of training and experience, which is a pure licensing burden.


Have you seen the CPA exam? It has an entire section that's just there for IQ filtering.

I was told (years ago) the teacher exam in AZ was designed to weed out all those with less than an eighth grade literacy level.

But you could take it as many times as you needed to.

That's a good point.

@Ak Mike

Not so simple. e.g. US doctors,almost necessarily, spend 4 years doing a pre-med undergrad. Do you classify that as "necessary training" or a "barrier to entry"? Or some of the restrictions on the stuff NP's or PA's are allowed to practice. It's hard to see if that's a competency issue or a cartel restricting supply.

It's a little like the drunk looking for his keys under the streetlight: for barbershops the purity of the licensing burden is manifest; for doctors it's more cleverly hidden & intricate. But the latter's surely worse in terms of total impact.

Rahul - yes, it is certainly necessary that students presenting themselves at a medical school should have a strong foundation in basic science, especially chemistry and biology, so they are prepared to learn the more advanced and specialized areas they need to know as competent physicians.

Restrictions on practice of nurses and physician's assistants is a separate topic, and I think does not bear on the licensing burden for physicians.

Careless - do you think that IQ is irrelevant to the practice of accountancy?

@Ak Mike:

If so, what about the doctors in other advanced western nations, e.g. most of western Europe etc. where med school intake is right after high school? Do they end up with crappy doctors?

The necessity argument in favor of a 4 year pre med is a joke. Even Engineers need a foundation in basic sciences. But the undergrad curriculum is competent to ensure coursework sufficient to gain that foundation. A separate 4-year pre-med track is designed mostly to throttle intake and prop up wages.

Rahul - I guess we'll just have to agree to disagree about that one. It seems our difference of opinion comes down to the fact that U.S. medical schools (4 years) require a college education first, where basic science is taught, while European schools (6 years) teach the basic science in house but cut out anything not directly related to medicine.
The idea that the requirement of an undergraduate degree is used to "throttle intake" is, I'm sorry, nonsense. Medical schools get hugely more applicants from the ranks of undergraduates than they can accept.

Here's an example of the egregious licensing process although not exactly in an occupational sense:


Had my kids watch this.

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