New Study Suggests Occupational Licensing Laws Create Income Inequality

By April 10, 2018Press Releases

FOR IMMEDIATE RELEASE

April 10, 2018

Arlington, VA – On Tuesday, the Archbridge Institute released a new study demonstrating how the growth of occupational licensing laws in America could be contributing to income inequality. Occupational licenses are essentially government permission-slips dictating who can work in certain fields.

The study found that workers in low and moderate-income professions in states with high levels of licensure demonstrate less upward mobility than workers in states that have lower licensing burdens.

Generation Opportunity (GO), a grassroots group that advocates for policies to improve the lives of young Americans, believes that occupational licensing restrictions make it harder for young people, including low-income workers, to find jobs, start businesses and support themselves and their families.

Generation Opportunity Policy Director David Barnes issued the following statement:

“Occupational licensing laws force millions of hard-working Americans to spend valuable time and money asking the government for permission to simply make a living. Many of these laws aren’t necessary in the modern era thanks to market resources like Google and Yelp that help young people determine a worker’s level of quality, affordability and safety without a government board. Outdated licensing laws shouldn’t be holding back the potential of young American workers and preventing them from climbing the economic ladder.”

In the 1950s, about one in twenty American workers needed an occupational license before they could work in the occupation of their choice. According to the National Bureau of Economic Research, that figure stands at about one in four. These requirements serve virtually no purpose for professions like painters, shampooers, and hair-braiders.

Background:

Recently, the Institute for Justice (IJ) released a study demonstrating the harmful impact of occupational licensing restrictions in states across the nation.

The IJ study found that licensing burdens are often disproportionate to the actual public health and safety risks of an occupation. Emergency medical technicians (EMTs), need to complete only about a month of training. Surprisingly, there are 73 occupations that have greater average licensing burdens than EMTs, including barbers, cosmetologists, home entertainment installers, interior designers, log scalers, manicurists and numerous contractor designations. To put that in perspective, the average cosmetologist needs to complete 386 days of training while the average EMT only needs to complete 34 days.

In addition to limiting employment opportunities, occupational licensing requirements cost consumers $200 billion annually as a result of reduced choice and competition.

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Generation Opportunity is a national, nonpartisan movement for more freedom, better opportunities, and a brighter future for all young Americans.

Author Jim Fellinger

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