I'm Dick Carpenter and this is License to Work.
It's 1965 and a young Navy veteran and factory worker needs a side job to
support his growing family.
He hits upon an idea.
A painting business.
It takes no special training and little initial investment, only about two hundred and fifty dollars.
For almost a decade he paints houses, barns, signs, businesses,
anything people asked for. And each year he brings in an extra five grand, or in
today's dollars about $39,000.
That young Navy veteran was my father.
Today, if I want to do the same thing, it would not be nearly as easy.
In a lot of states, I'd have to jump through multiple hoops.
I would have to apprentice for up to five years, pass at least one examination and pay hundreds
in fees to the state before I could do the same thing and get paid.
Why? Occupational licensing.
Many jobs now require a government permission slip,
otherwise known as an occupational license, just to work
jobs like locksmith,
shampooer,
tree trimmer,
florist
and hundreds of others.
Working without a license can often result in significant fines and even jail time.
But it wasn't always this way. In the 1950s only about 1 in 20 workers needed a license.
Today that number is about one in four.
And earning a license can often require significant amounts of time and money.
It's no wonder then that the issue of occupational licensing has become one of
the biggest labor economics issues in the country.
And it often plays out in places as
simple as your neighborhood barber shop.
So June, how much did it cost you to get your barber's license?
Well, I think it cost me about $11,000.
Oh, and how long did it take?
By law I was required to do a thousand hours of classes.
A thousand hours in order to do this,
this
and maybe this?
Proponents will tell you that licensing is necessary to protect public health and safety.
But is it true? We came here to the University of Minnesota, the
Humphrey School of Public Affairs, to ask the preeminent researcher on licensing,
Dr. Morris Kleiner.
So Dr. Kleiner, how much evidence is there that licensing actually protects
public health and safety?
Not very much.
There is some evidence, but the preponderance of the evidence
suggests that it doesn't do much to protect health and safety.
Well then surely licensing must increase quality of service and
weed out charlatans and quacks, right?
Well my work suggests there's virtually no effect on overall quality.
Well if that's the case then what does licensing do?
Well it's great for individuals who are fortunate enough to be licensed.
And let me give you an illustration.
OK.
If you view this circle as being an occupation,
licensing serves as a fence to keep people out of the occupation.
So if someone tries to get in, this fence serves as a barrier to entry.
OK, so then what's the effect?
Well, licensing drives up wages and prices
for those individuals who are fortunate enough to be licensed.
So then people who were kept out--that means there are fewer job opportunities?
That's correct, and especially for individuals who are entrepreneurs or
individuals who might work for those entrepreneurs.
That includes workers on the lower rungs of the economic ladder.
Our study, License to Work, examines the licensing requirements for 102 lower-income
occupations across all 50 states and the District of Columbia.
We found that breaking into these jobs takes, on average, almost a year in education and training,
passing an exam and more than 260 dollars in fees.
Of course, licensing limits job opportunities.
But that's just part of the story.
In future episodes we'll discuss how licenses are often designed
to protect licensees from competition, not the public.
We'll explore alternatives and suggest reforms that can untangle the
red tape of licensing to put more Americans back to work.
In the meantime, click the link to read our report
and subscribe to our channel in order to see future episodes.