
Study Reveals U.S. Consumers and Economy Lose Billions to Occupational Licensing - CryptoPunk
https://www.forbes.com/sites/instituteforjustice/2018/12/03/study-reveals-the-billions-of-dollars-u-s-consumers-and-the-economy-lose-to-occupational-licensing/#6c71d6bc39b6
======
bob_theslob646
For anyone that wants to read the study.

([https://ij.org/wp-
content/uploads/2018/11/Licensure_Report_W...](https://ij.org/wp-
content/uploads/2018/11/Licensure_Report_WEB.pdf))

I glanced through it and was not impressed.Why would they not show me what are
the pros and cons of licensing besides just the cost. Would you not want
someone to be able to verify that they have the skills to do what they say
they offer. ( I understand that depending on the occupation this may be up for
debate, due to verification issues and people gaming the tests, but I bet it
becomes paramount where the occupation is related a matter of life or death
like a doctor/surgeon.

I am sure there are things where getting a license is ridiculous, but for
other areas where it is absolutely necessary.

What I found interesting is that, those with licenses make more money?

It seems if I wanted to lobby an organization to suppress wages, it be at a
place such as the " Institute for Justice."

~~~
AnthonyMouse
> Why would they not show me what are the pros and cons of licensing besides
> just the cost.

Calculating only the cost is useful information. If you have something that
produces a $5B benefit at a $4.5B cost, the proponents will tout a $500M gain
without considering whether there is any alternative that can produce the same
benefit at a much lower cost.

It points out that there is a very large cost which is an opportunity for
optimization.

For example, if hairdressers are licensed due to questions of sanitation,
perhaps the same benefit -- or more benefit -- could be achieved through
periodic health inspections rather then licensing individual hairdressers.

Perhaps having licenses for electricians is net positive, but the existing
licensing system is wasteful or corrupt and makes it artificially more
difficult to obtain a license than is optimal.

Perhaps it is useful to license doctors and lawyers, but much of the work the
law currently requires them to do is less sensitive and could reasonably be
allowed to be done by nurses and paralegals instead.

> What I found interesting is that, those with licenses make more money?

This is the same kind of issue. If you make an extra $5000 but have to spend
$5500 in time/money related to keeping your license, you're not making $5000
more, you're losing $500. But your customers are paying $5000 more. And
someone who was qualified but couldn't navigate the Kafakaesque licensing
system had to take a lower paying job doing something else.

~~~
da_chicken
> Calculating only the cost is useful information.

I mean, kind of, but it's not remotely the only relevant piece of information.
I could make you a car for $2,000. Would you want to drive it at highway
speeds in it? What do you think your chances of survival would be in an
accident?

The article makes a point to call out the music therapy case to conjure the
specter of seemingly unnecessary regulation leading to regulatory capture, but
the _vast_ majority of licensed occupations are licensed because bad shit
happened when they weren't. Doctors were quacks. Bridges fell down. Buildings
caught fire. Planes fell from the sky. Millions of dollars in damages and
countless lives were lost over and over because some greedy sumbitch decided
to cut corners or defraud his customers or just didn't think about the
consequences of his design or service decisions. These regulations exist
because people ruined it.

And I mean, _is_ music therapy dangerous if it's misused? I don't know. I
don't even know what music therapy is used to treat! What harm _can_ unethical
application music therapy cause? Physiotherapy can easily be unethical. So can
psychotherapy and counseling. Why is music therapy harmless, especially if
it's been shown to have measurable heath effects? And how can I tell the
difference between an actual music therapist whose treatment is based on
established practices, and some guy with a blindfold, some headphones, a nice
couch, and an mp3 player? Rely on my for-profit insurance company to do that
for me, when _they_ have a conflict of interest as well?

Yes, it's difficult to gauge the effectiveness of regulation, especially
because you can't tell if what you got for $5,000 in regulation might have
been just as effective as if it had cost $500. But arguing that the choice of
whether or not to regulate comes down entirely to cost is kind of absurd.

~~~
mirashii
> But arguing that the choice of whether or not to regulate comes down
> entirely to cost is kind of absurd.

But this isn't what was argued. From the post you replied to

> For example, if hairdressers are licensed due to questions of sanitation,
> perhaps the same benefit -- or more benefit -- could be achieved through
> periodic health inspections rather then licensing individual hairdressers.

Regulation has many forms. Licensing is only one of them.

~~~
mcguire
Most hairdressers are independent subcontractors. The license is the only
handle the regulatory system has on them short of criminal proceedings.

~~~
CryptoPunk
Perhaps the 1400 hour instruction requirement could be cut down to 20 hours,
and the licensing could remain to give health inspectors a registry of who to
inspect?

Something like that would be the approach if the goal were to use regulations
to maintain good hygiene without imposing undue costs on young people hoping
to get into the industry. If the intention of the license is to keep others
out of the field of work though, 1400 hours of instruction would be the
approach taken.

------
ancorevard
Occupational licensing has gone way too far, and is in-fact a regressive tax
on the poor. Both on the part of the worker and the consumer.

In California you need a license to cut hair (Many European countries are
actually more free in this aspect compared to the US). However, you are exempt
if you only shampoo hair!

To get a license you need to enroll in a program that takes at least 9 months,
and you need to complete 1,600 hours of training...

...to cut hair.

~~~
vorpalhex
Because improperly sanitizing barber tools can absolutely spread disease and
you're waving sharp objects near somebodies face, including a child who may
not sit still.

~~~
austin_y
Restaurant employees, preparing or serving food, could spread disease or cause
harm, but are not obligated to be licensed. Would you support requiring cooks,
servers, wait staff, etc., to undergo licensing?

~~~
jackpirate
They most definitely are licensed at the state, county, and city level. They
require food handlers permits, and possible other certifications depending on
the specific activity.

That said, these licenses are typically about $10 and can be completed by
online website in about an hour. I would expect something similar could work
for hair cutting as well, but probably not for all the more exotic things like
hair dying.

~~~
moate
Former Chef here from the great state of NJ: I have never been licensed. I've
worked for some of the better restaurants in the state (including NYT 4 star
reviewed and James Beard nominated chefs). I've never known a licensed chef.

The restaurants require licensing out the ass, and I know there are ABC
(alcohol handling) certifications required for servers, but cooks don't. At
least one person (typically a manager) needs to be ServSafe certified, but
that's not a requirement for every worker.

Meanwhile, a hairdresser must be licensed before they can step into a salon
and do work. My sister and wife both worked in the industry, and I promise you
they would both scoff at the idea of a 1 hour form/test for someone cutting
hair. There's a ton of hygiene related things that they need to know to
prevent disease transmission from cutting and handling hair daily.

~~~
jjulius
Whether or not you need a food handler's card is likely state-specific.

------
Dowwie
While it exists, learn how to use occupational licensing to protect your
interests.

The next time you need a contractor for work, ask for his license and a
certificate of insurance. Using a search engine, confirm that the phone number
on the COI corresponds to the insurance company. Once verified, call the
insurance company and simply tell the agent who you are and that you're
verifying the account.

On an estimate for thousands of dollars of roofing work, I caught a property
manager colluding with a handyman acting as a roofer with the intent of
defrauding a condominium association of thousands of dollars. The license #
provided was years expired. Further, the insurance company had no record of
the customer. It was a complete fraud.

------
Matticus_Rex
This article is from a fantastic nonprofit public interest law firm that does
GREAT work in this area: the Institute for Justice
([https://ij.org/issues/economic-liberty/occupational-
licensin...](https://ij.org/issues/economic-liberty/occupational-licensing/))

They've successfully gotten a number of these stupid licenses struck down. In
terms of my perceived ROI for my donations, IJ is one of my favorite/most
worthwhile organizations that I support. They're also in Charity Navigator's
top 1% of nonprofits. I highly recommend donating!
([https://ij.org/support/](https://ij.org/support/))

~~~
bob_theslob646
>They've successfully gotten a number of these stupid licenses struck down.

Can you share which ones?

~~~
Matticus_Rex
Makeup licensing in NC: [https://ij.org/case/north-carolina-makeup-
schools/](https://ij.org/case/north-carolina-makeup-schools/)

Eyebrow threading in Louisiana: [https://ij.org/case/louisiana-
threading/](https://ij.org/case/louisiana-threading/)

Casket sales in Alabama (after the attention on the case, the AL legislature
changed the law): [https://ij.org/case/alabama-
caskets/](https://ij.org/case/alabama-caskets/)

Hair braiding in Iowa (after attention on the case, the governor used line-
item veto to remove the offending provisions in a bill):
[https://ij.org/press-release/victory-african-style-hair-
brai...](https://ij.org/press-release/victory-african-style-hair-braiders-
iowa/)

Hair braiding in Arkansas (after attention on the case, legislators sponsored
new legislation to change the treatment of hair braiding under the law):
[https://ij.org/case/arkansas-hair-braiding/](https://ij.org/case/arkansas-
hair-braiding/)

Hair braiding in Washington (the Department of Licensing changed its rules in
response to being sued): [https://ij.org/case/washington-african-hair-
braiding/](https://ij.org/case/washington-african-hair-braiding/)

Animal massage therapy in Arizona:
[https://ij.org/case/azmassage/](https://ij.org/case/azmassage/)

Hair braiding in Texas (struck down in Federal court and then fully
deregulated by the legislature afterward):
[https://ij.org/case/txbraiding/](https://ij.org/case/txbraiding/)

That's the last 5 years or so of won cases just on this issue. They also take
on civil asset forfeiture and legislated monopolies (such as taxi companies
that have been given an exclusive license to a city), among a few other
issues.

~~~
someone7x
That's an uncomfortable number of laws against African-style braiding.

Is licensure the new oppression meta?

~~~
Matticus_Rex
It's mostly just overbreadth of hairdressing laws -- legislators (largely
white males) don't think about putting in exceptions for certain types of what
they consider hairdressing, so it ends up covering braiding. You then get an
entrenched oligopoly of companies that have jumped through the hoops and
provide the service and therefore don't want the competition from unlicensed
people, so the law (even if it came into being through ignorance) gains
supporters with a vested interest in keeping the status quo.

------
mrnobody_67
Planet Money had a good episode on this:

Why It's Illegal To Braid Hair Without A License

[https://www.npr.org/sections/money/2014/10/15/356428708/epis...](https://www.npr.org/sections/money/2014/10/15/356428708/episode-381-why-
its-illegal-to-braid-hair-without-a-license)

------
Consultant32452
This primarily impacts the young and/or poor, who are losing their ability to
enter the job market with these increased moats. As long as it continues to
benefit incumbent wealth who has the power to market FUD to the consumer about
"unlicensed" workers, this will remain.

Here's another article I recommend from The Atlantic last year which touches
on this topic. [https://www.theatlantic.com/business/archive/2017/11/the-
rig...](https://www.theatlantic.com/business/archive/2017/11/the-right-to-
earn-a-living/546071/?single_page=true)

------
AngryData
The problem isn't that the licensing exists, the problem is licensing, once
implemented, is almost never critically reexamined and regularly gets pushed
for more difficult requirements regardless of those requirement's efficacy or
results. Why? Because harder to obtain licenses means anyone who already has a
license has much less competition and thus easier and more profits.

Why does someone who never uses a straight razor ever in their hair stylist
career need to learn all about straight razor shaving? Why does a barber that
doesn't apply or even possess any hair dye agents need to learn about hair
dyes? The license could easily be split into categories, split into multiple
licenses or otherwise be examined, but instead it is all packed into one
license that is much harder to get without having money pouring out of your
ass already to pay for 'schooling'.

I have a beauty school in my town, it doesn't make better stylists, it just
pumps them all out of their money and then throws them to the wind with their
piece of paper. They just followed some directions on a piece of paper and
didn't majorly fuck up, they don't actually have to understand what or why
they do certain things and definitely don't need to be skilled. "directions:
Shave some hair and clean the razor properly" "Oh wow I managed to do it a
single time, now im qualified for it! (yea right) Now I just gotta do 1000
hours of unrelated highlights and buzz cuts, and regardless of quality or
fuckups, I still get my license!" Yeah some people do study and become good
stylists, the majority of them however are just passed through because they
are paid to do so.

~~~
mindslight
This is the crux of it - these licensing boards, inspectors, and licensed
professionals have become their own little fiefdoms serving their own
entrenched power rather than the public good.

When it comes down to it, the only thing licensure does is set a bar to keep
out the extreme boneheads [0]. And that is necessary for sure - I've been
around long enough to see how many indiligent jokers there are in the world.
But I still philosophically believe everybody has an inherent right to do
their own work.

I came across a court case a while ago - Meyer vs Nantucket - of a guy who was
building his own house and did his own plumbing in Massachusetts [1]. The
ensuing saga reads like scenes from the movie Brazil. He made it all the way
to the state supreme court with photo documentation of how the plumbing met
code, and how the Nantucket plumbing inspector was not following their own
internal regulations. Meyer even found and hired a licensed plumber [2] as an
independent inspector. and he found no defects. The court stayed logical
through two rounds of appeals, and then suddenly nosedived into nonsense about
local boards having ultimate authority of all interpretation, and kicked the
case back down - seemingly having gotten the memo that if they were to do the
right thing, the status quo would be disrupted. Then the town fiefdom forced
him to pay a plumber to destroy the entirety of the work he did and have it
redone - basically pure vindictive punishment for thinking he could rock the
boat in the first place. This is the attitude that every bureaucratic
institution develops after they are taken for granted.

The code bodies operate in the same rent-seeking manner. The National
Electrical Code - law that we are all bound by - used to be up as a PDF on
public.resource.org, until they were bullied through the legal system into
taking it down. Now it is only available from magnet URLs. In a just world, it
would be published prominently on states' own websites alongside the rest of
the law.

[0] And just in case you don't know, work being done "to code" is a _bare
minimum_. It implies little about the actual quality or longevity of said
work.

[1] It's fine to do your own electrical, although many inspectors still become
hostile. But plumbing is strictly verboten.

[2] Retired, from out of the area. Because any licensed plumber still earning
their living would not want to get on the shit list.

------
Animats
That's from a front for the Koch brothers.[1]

I'm trying to find the source for the 20% or even 30% figure for jobs
requiring licenses. The trail leads back to a book published by the Upjohn
Institute. The New York Times cites that. That book makes the percentage
claim. But when they list the occupations requiring licensing, their toplist
is "Accountants, doctors, dentists, elementary school teachers, secondary
school teachers, lawyers, hairdressers and cosmetologists".[2] Those aren't
20% or 30% of the workforce.

The book is paywalled, but there is a free intro. Table 1.1 seems to be where
the lobbyists and the press are getting their numbers. The source for that
data is "The data for the 1980s are from Kleiner (1990) tabulations, and new
estimates were developed for 2000." Kleiner is _the author of the book_. He's
citing himself.

I wonder if he's including driving licenses. Looks like you have to pay to
find out.

[1]
[https://www.sourcewatch.org/index.php/Institute_for_Justice](https://www.sourcewatch.org/index.php/Institute_for_Justice)

[2]
[https://research.upjohn.org/up_press/18/](https://research.upjohn.org/up_press/18/)

~~~
drak0n1c
Why does it matter that an organization dedicated to political research and
philosophy is funded by X, Y, and Z individuals of repute? That's the essence
of ad hominem. I'm glad you take on the content of the study in your second
point.

Imagine if liberal-leaning research papers shared on HN were immediately
accosted with comments claiming the publication to be a "front" for George
Soros. Not helpful.

------
mcguire
I don't want to be all _ad hominem_ or anything, but...

" _Now, thanks to a new report from the Institute for Justice, University of
Minnesota economics professor Dr. Morris Kleiner and economist Dr. Evgeny
Vorotnikov, those costs have been quantified both nationally and in 36
separate states._ "

The Institute of Justice:

" _Since 1991, IJ has come to the aid of individuals who want to do the simple
things every American has the right to do—including own property, start and
grow a business, speak freely about commerce or politics, and provide their
children with a good education—but can’t because they find the government in
their way._

" _The Institute for Justice combines cutting-edge litigation, sophisticated
media relations, strategic research, boots-on-the-ground advocacy and much
more to fight on behalf of those individuals who are denied their
constitutional rights._ "

------
stevenkovar
I just had a discussion about this with my physical therapist yesterday. In
Texas, only three types of people are allowed to touch patients for healing
purposes: doctors, certified therapists, and priests.

In many cases, the certification process for therapy is such a time and money
sink that people will become priests in small "religions" as a legal
workaround to taking 1yr+ of archaic training.

~~~
jacquesm
The priests bit may not be the best example.

~~~
CryptoPunk
Obviously there are risks involved in occupations involving contact, as your
allusion to priest sexual abuse scandals references, but people need human
touch.

How much depression, suicide and drug-abuse is caused by the desire to tightly
control commercial human contact and the resultant dead-weight loss of people
not getting enough of it?

Unless there is a pressing public health threat from an activity (e.g. someone
who doesn't know how to drive, operating a motor vehicle on public roads),
society should think very long and hard before restricting people from
engaging in that activity.

If there is going to be licensing, it should be limited to restricting how
people can market their skills, where only those licensed can market
themselves as licensed. This gives quality-conscious consumers an easy way to
identify licensed practitioners, while giving those who value affordability
over safety the option of unlicensed services.

------
sgt101
I believe that licenses ensure that employers will struggle to commoditize and
exploit their workers. Highly licensed professions manage to capture
significant value in their industry value chains, the alternative is that
shareholders and the providers of leverage (banks and shadow banks) get
everything.

------
Simulacra
Check out this other IJ lawsuit about a Health Coach in Florida. This made it
into the WSJ.

[https://ij.org/case/florida-diet-coaching/](https://ij.org/case/florida-diet-
coaching/)

Why should anyone need a license to help people choose better foods to eat?

~~~
aidenn0
Licensing is one way to deal with the issue where the damage done by an inept
practitioner is likely to exceed their abilities to pay[1]. Bad dieting advice
can cause serious lifetime health issues. It seems possible (or even likely)
to me that Florida's dietician licensing doesn't address this situation well,
but there is nothing inherently nonsensical about licensing dieticians.

1: I'm not saying that licensing is the only way. If you want a list of a
half-dozen others, consult your local libertarian.

------
davidhyde
Is there ever a case we’re lobbying is beneficial to the general public or
does it only ever benefit the few?

------
downrightmike
More like they can't pay people less than subsistence wages in certain
professions.

------
mtberatwork
This is an op-ed from a libertarian think tank about a study they conducted
themselves. Quite a bit of bias here. Sure, there exists a grey area with the
music therapist anecdote they use, but personally, I'm quite fond of
electricians, plumbers, etc being licensed.

~~~
crdoconnor
The last three or so times I saw this topic on HN it was a link to an article
that cited a Koch funded think tank.

It seems to be a particular hobby horse of theirs.

Which is weird, why are a bunch of oil guys obsessed with hairdresser
licensing?

~~~
drak0n1c
Billionaires are human beings capable of donating to political causes out of
idealism for the greater good, not necessarily only because they think it will
increase their net worth by another few million dollars.

Sure, there exist conspiracy theories of mustache-twirling malevolent villains
in the Kochs wanting the extra profits from deregulation or in Soros desiring
to short the currency of a destabilized countries. But it is disingenuous to
begin one's speculation and curiosity with the assumption that those theories
of malevolence are true.

~~~
crdoconnor
These billionaires do pollute a lot and have had run ins with the NEA which
may suggest a certain dislike of government regulation.

But yes, perhaps I'm just spreading conspiracy theories and their obsession
with hairdresser licenses has the purest of idealistic motives.

~~~
drak0n1c
It's possible for people to have lasting ideals and biases that were shaped by
their personal experiences in work and life, and their advocacy in old age
does not necessarily indicate that they are still on the warpath to make their
next buck or pollute even more.

------
emn13
I think it's terribly worrisome that anybody is talking this article
seriously.

To be upfront about my own assumptions: I totally believe that licensing in
general is nonsense.

But that's not the point! Just because something agrees with our preconceived
notions doesn't mean the evidence holds any water whatsoever.

And this piece has a few classic "terrible science reporting" features:

\- It wildly overstates the scope of the original research, making it sound
way more broadly applicable that it really is. The research doesn't actually
appear to have a solid method for quantifying costs at all, and it doesn't
appear to have a method for quantifying benefits either. Sounding like your
using statistics [https://ij.org/wp-
content/uploads/2018/11/Licensure_Report_W...](https://ij.org/wp-
content/uploads/2018/11/Licensure_Report_WEB.pdf) doesn't make your data any
more real-world impactful. The data does appear to reasonably quantify the
amount of licensing, and there are some indications as to how much that
affects labor costs. That's pretty much it. \- It omits key facts that would
lead readers to critically examine the evidence, such as the fact that it was
funded (at least in part) by an advocacy group (John Templeton Foundation)
dedicated to market freedom, and it was performed and published by a thinktank
similarly dedicated towards deregulation (Institute for Justice). That doesn't
automatically invalidate the research, but insofar as the researchers and
publishers have considerable leeway in choosing methods, areas of study and
what to publish, you should expect considerable bias - and the fact that their
analysis supports their political stance certainly doesn't suggest otherwise.
\- It's published by and appears to target those who likely already hold
similar beliefs; i.e.: this appears to be part of the trend to live in your
own bubble. \- I don't think they actually linked to the original research?
I'm assuming it's [https://ij.org/wp-
content/uploads/2018/11/Licensure_Report_W...](https://ij.org/wp-
content/uploads/2018/11/Licensure_Report_WEB.pdf)?

If anything, the lack of convincing evidence despite all of that and despite
my own assumptions leads me to question if this belief really is valid. But
I'm still betting it is, and that this kind of thing is simply hard to measure
with means like this.

TL;DR: unconvincing, but at least honest-looking research that tries to
extrapolate some solid-looking questionnaire into something totally different,
which was then regurgitated into trash journalism designed to deceive, not
inform. I don't read a lot of Forbes, but clearly they're a publisher to be
wary of.

~~~
avs733
Thank you.

This is a PERFECT example of one of the things I try to teach students about
statistics and science communication.

The Forbes articles wildly WILDLY overstates the relatively modest conclusions
of the paper. Academic papers take small, almost microscopic steps for a
reason - each step in a chain of logic needs to be heavily and clearly
supported by evidence.

Often they say things like X is correlated with Y and then someone else
(intentionally for clicks or from a lack of understanding) implies causality
and turns conditional observation into absolutist pronouncements.

Academic studies are almost always exercises in nuance...if a news article is
not the same don't trust it.

------
jbob2000
We just defunded the College of Midwives in Ontario. $800,000 a year to
support a professional organization of _900_ people.

Somehow, the midwifery profession was able to exist for thousands of years
before this professional organization existed. I am sure it will be fine
without it. The administration, on the other hand....

~~~
mywittyname
I feel like this argument should be a class of fallacy. Lots of things have
"existed" for a long time, but that doesn't mean previous iterations were
effective. All it proves is that a problem has existed for a long time and
people have been attempting to address it.

Historically, women frequently died from child birth. Modern medicine has made
child birth significantly safer for both mother and child. These advancements
need to be disseminated to individuals, and society has a need to determine
whether or not a person knows the latest scientifically sound techniques.

Professional licensing fulfills this role.

Of course, it's more expensive to hire a person whose spent years training.
But without some verification, there's going to be a race to the bottom as
untrained individuals undercut the competition. And yes, it does act as a
barrier to entry for people who could do a great job.

But, the risks of hiring an poorly trained midwife are much more serious than
those of hiring an untrained software developer. Thus, society is okay with
having unlicensed people writing software but isn't okay with unlicensed
people treating them for injuries.

~~~
christopheraden
> I feel like this argument should be a class of fallacy. Lots of things have
> "existed" for a long time, but that doesn't mean previous iterations were
> effective.

This is pretty close to Survivorship Bias
([https://en.wikipedia.org/wiki/Survivorship_bias](https://en.wikipedia.org/wiki/Survivorship_bias)).
Outcomes of midwifery of yore is no different than present midwifery if you
ignore the fatalities and only focus on successful deliveries.

