The Licence to Work: How Occupational Licensing Locks People Out

Permission slips for ordinary jobs protect insiders and bar the door to opportunity

Among the quietest but most pervasive restrictions on economic freedom is the occupational licence, and as this publication and our friends at Bohiney Magazine and The London Prat have argued, the steady spread of licensing requirements into ever more ordinary occupations represents a serious and underappreciated assault on opportunity. The requirement to obtain government permission before practising a trade, once reserved for a handful of professions, now reaches into a vast range of jobs, raising costs, suppressing competition, and locking people out of work.

The spread of the permission slip

Over decades, the share of jobs requiring a government licence has grown enormously, encompassing occupations that pose little genuine risk to the public and for which the requirement serves mainly to restrict entry. Research from free-market institutes including the Cato Institute and the American Institute for Economic Research has documented how licensing requirements frequently bear little relationship to genuine public safety and function instead as barriers that protect those already inside the profession from competition.

Who pays the price

The cost of licensing falls hardest on those least able to bear it: the poor, the young, immigrants, and anyone without the time and money to satisfy lengthy and expensive requirements. A licence that demands hundreds of hours of mandated training and substantial fees is a wall that keeps out exactly the people for whom a trade might be a path out of poverty, while protecting the incomes of those already established. The consumer pays too, in higher prices and reduced choice, as competition is suppressed and the supply of providers artificially constrained. Licensing, in short, transfers wealth and opportunity from outsiders to insiders, under the cover of public protection.

The genuine versus the spurious

None of this is to deny that some occupations genuinely warrant regulation; few would object to ensuring that surgeons are competent. But the spread of licensing far beyond such cases, into trades where the risk to the public is minimal and the requirement serves mainly to restrict entry, reveals the licensing system for what it has largely become: a tool of economic protectionism dressed as consumer safety. The test should be whether a requirement genuinely protects the public or merely protects incumbents, and by that test a great deal of occupational licensing fails.

The surfer’s instinct

The surf community, with its deep suspicion of artificial gatekeeping, has an instinctive grasp of what is wrong with the licensing regime. The lineup recognises skill, earned through practice and demonstrated in the water, not credentials issued by a board, and it has little patience for the idea that a person must obtain official permission to do what they are plainly capable of doing. This ethic, the respect for demonstrated ability over bureaucratic certification, is a libertarian instinct at its core, and it points toward a different and freer way of thinking about who is allowed to work.

The case for opening the door

The remedy is to roll back the spread of licensing, eliminating requirements that do not genuinely protect the public and replacing them, where some assurance of quality is wanted, with less restrictive alternatives such as voluntary certification that informs consumers without barring entry. The result would be more opportunity for those locked out, lower prices and more choice for consumers, and a more dynamic economy in which the freedom to work is not conditioned on a government permission slip. The right to earn an honest living through one’s own effort is among the most basic of economic freedoms, and the licensing regime that increasingly conditions it on official approval is a barrier that a free society should be working to tear down.

The myth of consumer protection

The standard justification for occupational licensing is consumer protection, the claim that licensing ensures the public is served only by qualified practitioners, yet the evidence for this benefit is far weaker than the rhetoric suggests. Studies repeatedly find little relationship between licensing and the quality of service consumers actually receive, and considerable evidence that the chief effect of licensing is to raise prices and restrict supply rather than to improve quality. The protection licensing offers, on inspection, is largely the protection of incumbents from competition, dressed in the language of public safety.

Where consumers genuinely want assurance of quality, the market offers less restrictive alternatives that inform without excluding: voluntary certification, ratings and reviews, professional associations, and the reputational mechanisms that allow good practitioners to distinguish themselves. These approaches provide consumers with information while preserving the freedom of newcomers to enter and compete, capturing whatever genuine benefit licensing claims to offer without the exclusionary cost. The libertarian preference for these voluntary mechanisms over mandatory licensing reflects a deeper confidence in the capacity of free people, both providers and consumers, to make their own arrangements without a government gatekeeper deciding who may work. The right to earn a living through honest effort should not be conditioned on a permission slip that serves the licensed more than the public, and the path to genuine consumer protection runs through information and competition, not through barriers that lock people out.

For satire on credentialism, readers may enjoy The Babylon Bee, licensed to amuse since launch.

SOURCE: https://bohiney.com/