Federal Trade Commission Unshackles Licenses to Opportunity

Today almost one-third of Americans need an occupational license to work legally, a number that has increased fivefold since the mid-20th century. Occupations requiring licenses range from practicing physicians to shampooers to fortune tellers.

Uncle Sam appears to be taking notice. Maureen Ohlhaussen, acting chairman of the Federal Trade Commission (FTC), has recently spearheaded an Economic Liberty Taskforce to address many of the issues caused by the current licensing landscape.

The taskforce will be hosting a roundtable on July 27 in Washington D.C. to discuss the barriers of entry caused by state-specific licensing, as well as interstate licensure portability strategies with initiatives directed towards military families. 

Because licensing is controlled by the states, requirements for licenses are not uniform or systematic. The Institute for Justice analyzed the occupations that require licenses and highlighted how they vary by state. For instance, a barber’s license requires almost two and a half years of education and training in Nevada, but only 175 days of training in Wyoming. Moreover, a barber from Nevada could not cut hair in any other state, including the less stringent Wyoming.

Cities can further complicate matters by spawning unnecessary restrictions, such as New York City’s new ban on pet sitting without a kennel license. Another traditionally teen job is eliminated by the bureaucracy.

Research by Morris Kleiner from the University of Minnesota concludes that occupational licenses decrease interstate mobility, raise prices, and have no clear effect upon the quality of services provided. Using standard models, Kleiner estimates that licenses can result in 2.8 million fewer jobs with an aggregate cost of $203 billion to consumers annually.

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