Occupational Licensing -- The Rhetoric And The Reality
There was recently a "crackdown" on unlicensed contractors here in California. What I want to know is, why can't I choose whether or not to hire somebody state-approved? We have building inspections to make sure properties are safe -- which doesn't actually guarantee their safety, but people like to believe it does -- and, the truth is, people don't want to kill their friends and family with shoddy work. Also, it is no guarantee that work is going to be of a high standard simply because you hire somebody with a license.
Donald J. Boudreaux writes at Trib Live:
The first hint that the real goal of occupational licensing isn't to protect consumers' health and welfare is that far too many of the professions that are licensed pose practically zero risks to ordinary people. Among the professions that are licensed in various U.S. states are florists, hair braiders and casket sellers. What are the chances that consumers will be wounded by poorly arranged bouquets of flowers or that corpses will be made more dead by defective caskets?The real goal of occupational licensing is to protect not consumers, but incumbent suppliers. Most occupational-licensing schemes require entrants into a trade to pass exams -- exams designed and graded by representatives of incumbent suppliers.
But what about doctors? Lawyers? He says:
The case for licensing these professions is no stronger than is the case for licensing florists and hair braiders. The reasons are many. Here are just two.First, precisely because medical care and legal counsel are especially important services, it's especially important that competition to supply these services be as intense as possible. If the price of flowers is unnecessarily high or the quality poor, that's unfortunate but hardly tragic. Not so for the prices and quality of the services of doctors and lawyers.
Too high a price for medical visits will cause too many people to resort to self-diagnosis and self-medication. Too high a price for legal services will cause too many people to write their own wills or negotiate their own divorce settlements. Getting matters wrong on these fronts can be quite serious.Won't, though, the absence of licensing allow large numbers of unqualified doctors and lawyers to practice? No.
People are not generally stupid when spending their own money on themselves and their loved ones. Without government licensing, people will demand -- and other people will supply -- information on different physicians and attorneys. Websites and smartphone apps will be created that, for a small fee, collect and distribute unbiased information on doctors and lawyers. People in need of medical care or legal advice will be free to consult this information and to use it as they, rather than some distant bureaucrat, choose.
And competition among physicians and lawyers -- made more intense by the absence of government licensing -- will drive these professionals to offer high-quality services at affordable prices.
Does that go too far? Who should need to be licensed? Who should not?
via @overlawyered







I'll bet you want your pilots licensed.
Jeff Guinn at April 2, 2014 11:15 PM
I don't necessarily disagree, but consider the following argument *for* state-licensed building inspectors:
People are stupid, and they will cut corners. Joe Sixpack will throwh up a shack, and get his best beer-buddy to "inspect" it. The shack will collapse in the first storm. People will be injured or killed.
In order to prevent this, the government has an interest in seeing that inspections actually do enforce reasonable construction standards. Which means that the government must have some trust in the inspectors. Which means licensing.
Of course, I can argue the other side just as well. I had a friend whose (well-constructed) business building continually failed inspection, until such time as he got a clue, and accidentally left some cash lying around during an inspection.
a_random_guy at April 2, 2014 11:56 PM
"Won't, though, the absence of licensing allow large numbers of unqualified doctors and lawyers to practice? No."
----------
YES. Of course it will. He lost credibility with that answer. The next paragraph in which he attempts to explain his answer is so full of oversights that it gives me a headache. He seems to have little understanding of anything outside his comfy middle-class world.
He's a economics professor. Ha. That's perfect.
Tim at April 3, 2014 12:52 AM
*an* :)
Tim at April 3, 2014 12:54 AM
You've gone off the rails here.
1. Professional services (not all of them licensed) account for about 4% of value added in the economy, so the deadweight loss is not nearly as severe as you might suppose when someone (e.g. the normally sensible Glenn Reynolds) begins to quote ill-assembled statistics on the share of positions requiring licensure and conflating licensure with certification (the latter being merely hiring conventions).
2. You've got a number of occupations who came to be licensed due to transient concerns or due to rent-seeking activity. Sunset legislation can often be a conduit to liquidating the boards administering the licensing. In New York, hearing aid dealers would be an example.
3. You've got some occupations which are trust-invested and often bonded. They're not high skill, but some entry screens are utile: security guards and childcare workers would be examples.
4. I think you underestimate the information deficits in many markets, as well as the inefficiency of the tort system.
5. The work of insurance underwriters might suffice to replace the function of some occupational licensing authorities. Mandating insurance coverage is also a state regulatory activity which restricts practice, though.
6. Continuing education requirements have now been incorporated into physician licensing, so it is less structured to function merely as a restrictor of competition.
7. The most troublesome aspect of this and analogous practices is the manufacture of pseudo-professions and pseudo-professional training programs. The obvious examples here would be teacher training, social work, and library administration. Dismantling these certification and training programs should be a priority.
Art Deco at April 3, 2014 2:38 AM
> Professional services (not all of them licensed)
> account for about 4% of value added in the economy
Where are you getting this figure from? I regularly see stats that we spend 17% of GDP on healthcare services alone, and the provision of pretty much all healthcare services requires licensing. And that's just one industry - most of the economy is service based.
Snoopy at April 3, 2014 4:36 AM
Obviously no one supporting this idea has ever dealt with an "Irish Traveler".
Radwaste at April 3, 2014 5:20 AM
Obviously no one supporting this idea has ever dealt with an "Irish Traveler".
You're going to hire one to build your house? I don't think so. And I don't think they're traveling around America in covered wagons pounding tin plates and looking for work erecting houses.
Amy Alkon at April 3, 2014 6:33 AM
"I'll bet you want your pilots licensed.
Endorsed by a third party, sure. Licensed by the government, no. There's a difference.
I also want the food I buy at the grocery store (and the conditions it was produced under) to be inspected by someone, but I am opposed to the FDA.
The difference is that one allows me to choose which third parties are credible and the other does not.
Chris Rhodes at April 3, 2014 6:51 AM
In order to prevent this, the government has an interest in seeing that inspections actually do enforce reasonable construction standards.
Just before the housing bubble burst a local news team did a story on state housing inspectors.
Seems based on the number of houses they signed off on they were spending about 45 seconds to inspect a house.
lujlp at April 3, 2014 6:58 AM
Amy Alkon
http://www.advicegoddess.com/archives/2014/04/03/occupational_li.html#comment-4452260">comment from lujlpThe government housing inspector who coercively inspected my rental residence -- in a process in which I have fewer rights than a criminal suspect with police at the door -- asked for things to be "fixed" that were not broken or a danger. This every few years inspection program of rental housing in Los Angeles is a jobs program, and not a safety program.
Amy Alkon
at April 3, 2014 7:07 AM
Where are you getting this figure from?
The Bureau of Economic Analysis of the Commerce Department, and it does not include medical care or 'social assistance'.
IIRC, about 12% of value added is in medical care and 'social assistance'. The 17% figure you see is computed by dividing gross output in the medical sector by gross domestic product rather than by gross output.
Art Deco at April 3, 2014 7:19 AM
"Obviously no one supporting this idea has ever dealt with an "Irish Traveler".
You're going to hire one to build your house? I don't think so. And I don't think they're traveling around America in covered wagons pounding tin plates and looking for work erecting houses."
No, they're travelling around America in pickup trucks, and while they're no longer pounding tin plates, they're definitely looking for work.
http://en.wikipedia.org/wiki/Irish_Travellers
Maybe they are not so prevalent in CA, being most based in the East and South-East.
llater,
llamas
llamas at April 3, 2014 9:09 AM
I'm happy with the doctor situation as is. If you want to go to an unregulated health practitioner, there are any number of alternative medicine types, with varying degrees of knowledge about mainstream medicine, that you can go to.
NicoleK at April 3, 2014 9:42 AM
Chris Rhodes! Is this the same Chris Rhodes as the one from the Pit?!!!!
NicoleK at April 3, 2014 9:50 AM
Jeff Guinn at April 3, 2014 9:58 AM
So the "Irish Traveler" is not to be trusted, but always trust the licensed builders?
There was an investigation on one of the evening news shows about a subdivision developer. The licensed developer was sued by many of the home owners for shoddy work. That included bad plumbing, electrical and other issues. They showed one house that the back wall was not attached to the foundation to the point that they could push the wall with a 3-5" deflection.
But at the same time I don't necessarily trust trade organizations. I have heard stories of businesses that join the BBB as a "gold" member suddenly have the complaints lodged against them magically go away.
There are some professions that should have a minimum licensing standard. Doctors and/or surgeons because a mistake can kill or permanently disable someone. Pharmacists probably need a minimum standard as well. Pilots, because if they screw up, can kill a lot of people.
Lawyers are debatable. The problem is that the laws are too complicated and nuanced and shouldn't be.
Jim P. at April 3, 2014 10:07 AM
Art Deco really did say it all. Thank you.
I know I want the block walls that line the streets my kids walk on to get to school to have been built by a well trained and competent contractor.
I have no doubt there are abuses.
Fix the abuses, keep the baby.
jerry at April 3, 2014 5:19 PM
@Jeff Guinn
By which third party?
There aren't existing third parties yet in those areas because the government holds a monopoly on licensing in those areas. They'd spring up pretty quick if that monopoly was to be taken down.
What problems does the present system of government pilot licensing pose?
It's coercive, for one. How can you know if the licensing is any good or represents a good ROI if there's no competition in it?
@NicoleK
I'm guessing not, since the reference doesn't ring a bell. :P
Chris Rhodes at April 4, 2014 6:51 AM
"You're going to hire one to build your house? I don't think so."
Wow, denial.
That's super effective.
Radwaste at April 4, 2014 9:09 AM
Amy Alkon
http://www.advicegoddess.com/archives/2014/04/03/occupational_li.html#comment-4455851">comment from RadwasteA type of gypsy most prevalent in a country an ocean away is really going to come knock on my gate in California and ask if I need any roof repairs?
I'm likewise in "denial" about the existence of talking toads and trees that drop winning lottery tickets on people sitting under them.
Amy Alkon
at April 4, 2014 9:14 AM
The description is was a little more specific than you're probably used to hearing. In your case it would be a couple of illegal immigrants.
We get them in the Midwest as a couple of rednecks who show up and say "We're paving the local [church/store/...] parking lot and may have some left over. Do you want us to put it on your driveway?" If you say yes, they will then do a really crappy job of paving your driveway and charge you twice the cost of hiring a real company.
Sometimes the gypsies are going to do a great job. Sometimes they just suck. But a license to do work doesn't change that.
Jim P. at April 4, 2014 10:04 AM
A type of gypsy most prevalent in a country an ocean away is really going to come knock on my gate in California and ask if I need any roof repairs?
Even if they're most prevalent across the Atlantic, that doesn't mean they don't exist in the U.S.
Lincoln Co. Sheriff warning residents about seasonal 'Irish-travelers'
It's my understanding that most of them live in the southeastern U.S. and, I would presume, they do most of their scamming in that general area, so while they might not be knocking on doors in Southern California, they probably are ripping off a lot of people in the Carolinas and Georgia.
JD at April 4, 2014 12:37 PM
The problem is that the laws are too complicated and nuanced and shouldn't be.
I agree with you 100%, Jim, but we're not lawyers. I suspect that among lawyers, who benefit from the status quo, not many feel that way.
JD at April 4, 2014 12:40 PM
The problem is that the laws are too complicated and nuanced and shouldn't be.
I agree with you 100%, Jim, but we're not lawyers. I suspect that among lawyers, who benefit from the status quo, not many feel that way.
Posted by: JD at April 4, 2014 12:40 PM
Not defending the status quo, but the laws are complicated and nuanced because modern life is incredibly complicated compared to a hundred years ago.
More than half the population is so ignorant about what the real risks are,of any number of different things, from surgery, to contractor work, to lawn equipment that they are looking to make someone else responsible for the bad outcomes of their poor decision making.
Everyone who has ever gotten burned by doing something stupid,thinks it is the government's job to fix things so it doesn't happen again.
Isab at April 4, 2014 7:29 PM
WE already have those networks for finding out about business, etc and it works fairly poorly.
I am still on my companies new hire email forum thing. Some one recently asked for a good auto mechanic. Every one mentioned had at least one negative comment on them. If I were to go over the list I would say that no matter where I go I have a significant chance of being ripped off and/or getting shoddy work.
I think people also need to better understand what many of these licenses mean. I had a discussion with my now retired barber...a barber's license is all about proper cleaning of tools and being able to deal with accidents, nothing about cutting hair. Many of the builder and landscaping licenses are primarily about having a bond and an official address for them to be sued at.
The scam repair guy is a well known concept around here....no idea why they don't have them in CA.
The Former Banker at April 4, 2014 10:25 PM
"A type of gypsy most prevalent in a country an ocean away is really going to come knock on my gate in California and ask if I need any roof repairs?"
Sorry, no. This actually refers to Gypsies present in the United States, notably in the settlement called "Murphy Village" near Edgefield, South Carolina.
Radwaste at April 9, 2014 12:22 AM
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