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Completely Unjustified Occupational Licensing

I have been doing a series on blog posts on completely unjustified government policies. It started here. This post is about another disaster: unjustified forms of occupational licensing.

Occupational licensing is a disputed policy. Some people criticize it for reducing competition and for raising the cost of services. Others defend it on the ground that it protects the public from unqualified practitioners. People can certainly think of examples to support both sides.

My own opinion is that occupational licensing is dangerous and we should almost always rely upon certification. The government could certify persons for an occupation, and those persons could display and advertise that certification. Persons who were not certified could still practice the occupation but could not say they were certified. A more intrusive regulation might require uncertified persons to list in their place of business and in advertising that they are uncertified.

While I believe such certification is the best government policy, I don’t believe opposition to it falls into the category of completely unjustified policies. There are some reasonable arguments for such opposition.

What is completely unjustified is the situation that exists in the United States where each state has occupational licensing and requires someone to become re-licensed when they move from state to state. This is an outrage with no defense. It merely serves to protect from competition people serving in occupations within the state.

The obvious solution is to have a form of reciprocity—if someone gets a license in one state, then they are entitled to practice in other states under that license. It is sometimes argued that some states have deficient licensing regimes that do not sufficiently protect the public and therefore such reciprocity should be extended to those states.

It is not clear that most of these “deficient” regimes are actually problematic, but let’s imagine that some are. One could accommodate this concern about deficient regimes by allowing states not to accept reciprocity from states that have substantially different licensing regimes than they have. But that justification could not be used for similar licensing regimes.

Unfortunately, that claim is often used. Take just one example. I know someone who is a dentist and had passed the passed the Northeast Regional boards, but when they moved to California, they had to take the California boards again. Absurd. But what is worse is that the test questions for the California boards were taken from the Northeast Regional boards.

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