Tuesday, August 28, 2007

Wisconsin: 111 Ways to Say "You Can't Work Here"

Reason Foundation has a new study which examines State "licensing" procedures. As you might suspect, they are very skeptical of many "license requirements."

You'll be pleased to know that Wisconsin requires licenses for 111 occupations, making the "Progress" State 9th-most-restrictive in the USA. (Natch, each license is accompanied by a Fee--payable to the State or one of its subsidiary Gummints.)

Says Reason:

Today, over 1,000 occupations are regulated at the state level—and still more are regulated at the federal and municipal levels. Governments require licenses for everyone from doctors and lawyers to florists and fortune tellers...

The survey also indicates that occupational licensing laws are very arbitrary, as evidenced by the disparity in which occupations are licensed and how burdensome the licensing regulations are from one state to the next. For example, there were several cases in which neighboring states had significant differences in the number of licensed job categories: California (177) and Arizona (72), Arkansas (128) and both Missouri (41) and Mississippi (68), New Jersey (114) and Pennsylvania (62), North Carolina (107) and South Carolina (60), Tennessee (110) and Alabama (70), and Florida (104) and Alabama (70). If some places work just fine with minimal or no regulations, why must others be plagued with so many restrictive laws? Are things so drastically different just across state lines that this disparity could be justified?

Closer to home, while Wisconsin requires 111 licenses, Illinois only requires 93, and Minnesota requires 95. Obviously, Illinois and Minnesota residents are at great risk to life and limb. No WONDER we have higher taxes...we're safe!

Well, maybe.

The real motivation behind most occupational licensing regulations is one of special interests, not
the public interest. By banding together and convincing governments to impose new or stricter
licensing laws, existing practitioners (who typically are exempted from the new laws through
grandfather clauses) can raise the cost of doing business for potential competitors. These barriers to entry reduce competition, allowing the existing practitioners to keep prices and profits higher than they otherwise would be in a truly free market. Moreover, since they have less competition, licensed businesses have less incentive to innovate or invest in research and development to stay ahead of their rivals.

If not safe, we're expensive:

This imposes a great cost on the economy. By restricting competition, licensing decreases the rate of job growth by an average of 20 percent. The total cost of licensing regulations is estimated at between $34.8 billion and $41.7 billion per year.

It's inter-necine, as well. A Milwaukee charter-school uses teachers which are not "licensed" for an academic discipline, causing angst in WEA membership. I mean, would YOU let a college-grad Ed major teach 6th-grade math if they studied English? Or 8th-grade English if they studied math?



capper said...

Your post missed three thing, Dad.

1) The government also benefits from this as they charge fees to be tested to become licensed and/or certified, then an annual fee to maintain said certification. The required training is almost always offered by a government (UW) or private agency (special interest).

2) These licenses and certifications do not necessarily mean much as that if a person is caught doing something unethical and/or illegal, they can ofen avoid prosecution by agreeing to give up said license/certification.

3) Agencies often get around these requirements by use of semantics. Hospitals are a wonderful example. First, there were nurses aids. Then under TOMMY!! the NAs needed to become certified, increasing their value and pay. The hospitals then charged more to the patient to cover the increased pay. Now more and more hospitals, nursing homes, etc. are employing personal aids or personal care aids (they apparently cannot decide yet which term they prefer) which do not have to be certified. This means they pay them less for doing the same work, but of course they do not lower their charges to reflect their savings, they just pocket the increased profit.

Dad29 said...

Thanks for the addition. I DID actually cover fees, but not nearly as comprehensively as you did here.

Anonymous said...

As would be expected, Reason has a liberterian take on the matter. The whole point of licensing is to protect the public interest. CDLs obviously are there to impart a minimum skill set. More importantly, there are significant savings in court costs. For example, if one goes to a we-provide-the-paperwork places rather than a realtor, one has few if any legal protections in the transaction. For the liberterian this isn't an issue, but I kind of like not having to pay $150/hr to an attorney to get the same protection as I do from using a realtor.

Dad29 said...

I don't subscribe to the Libertarian viewpoint wholesale.

Attorneys, MDs, Civil Engineers, CPAs, yah.

Barbers? Beauticians? Really??

Reaganite said...

Capper, are you starting to come over to the Dark Side? Just kidding.

Dad, as you know, I argued in a post on my site that licensing restrictions can be too protectionist even in the types of disciplines that you acknowledge should be licensed. Once an industry is licensed, it works to pull as many types of services as possible under that umbrella. Lawyers, a group to which I belong (often to my embarassment), are attempting such a power play right now.

By the way, m.z., the new rules the Bar is trying to impose may restrict some of those things you have had brokers do in the past. Your use of a broker, rather than a lawyer, is an exercise of some free market choices. You actually do not receive the same protection using a broker that you get using a lawyer (for example, brokers do not review title exceptions, which frequently result in homebuyers assuming costs that they do not anticipate), but based on the cost savings, you make the choice that a broker is a better bet. Fine.

But the more we license, the more we take those kinds of choices away from people. In same cases, that makes sense (I don't think we want to allow amateur heart surgeons). However, for example, it took Wisconsin estheticians many years to get legislation passed that would allow them to do some types of skin buffing without the supervision of dermatologists. Ridiculous.

Read Prof. Walter Williams' The State Against Blacks in which he outlines the extreme cost in the form of higher fares and lost employment from overly restrictive licensing of New York cabdrivers. It is that type of excess that plagues most licensing programs.