Conservatives and libertarians are up in arms about “anti-entrepreneur, anticompetitive” occupational-licensing laws. And rightly so. Markets serve consumers best when participants have to compete with price and quality—not under the dictates of state-imposed cartels. Unjustified barriers to entering or staying in the market leave consumers with fewer choices and higher prices.
Big government driving up the price of artisanal baked goods and floral arrangements may not seem like pressing issues, but overregulation of professional services can cause real harm. There is a crisis in the United States over the cost and availability of medical care, but many states actively prevent a full array of services and cost options from being made available to their residents. States allow medical boards controlled by doctors to prohibit nurse practitioners and other qualified medical professionals from making the services they are qualified to provide more available and less costly. Likewise, lawyers charge rates poor people cannot afford, but they enjoy a monopoly on desperately needed legal services—services they aren’t even providing. In fact, paralegals could be trained to take on some of these duties—like representing tenants in eviction proceedings, a high-demand area where the vast majority of tenants are unrepresented and where being unrepresented correlates with losing one’s home. Unsurprisingly, though, the lawyer and doctor cartels, which wield considerable power, seem safe for the time being.
Meanwhile, efforts to challenge the most absurd licensing laws keeping the little guy from making a living have had mixed results. The Institute for Justice and other libertarian law firms have challenged the constitutionality of regulatory barriers on behalf of would-be bakers, braiders, casket makers, florists, veterinary masseuses, tour guides, taxi drivers, eyebrow threaders, teeth whiteners, and more—but success is hard won. That’s because laws that restrict “the right to economic freedom” or “the right to make a living” receive the lowest level of scrutiny in court: rational-basis review. That standard requires courts to uphold a law unless it lacks a rational relationship to a legitimate state interest. So, to win under rational-basis review, plaintiffs must show that either the law is meant to further an illegitimate purpose (like, say, expressing animosity toward gay people) or that, although the state has a legitimate interest (like the protection of health), the law isn’t rationally related to furthering that interest. The standard is very deferential to states and plaintiffs, who seldom win when it is applied—and courts can’t strike down a law just because it’s stupid.
Courts of appeal have split over whether or not protecting favored groups from economic competition is a legitimate state interest. The Institute for Justice recently asked the Supreme Court to answer this question in a challenge to Connecticut’s regulation of teeth whitening—a simple, safe cosmetic procedure that can be performed at home. But state dental boards across the country, unhappy with competition from salons that offer low-cost teeth whitening, have barred anyone but licensed dentists and hygienists from providing the service. Connecticut’s dentist-controlled Dental Commission wrote the regulations, which subject salon operators to up to $25,000 in fines or five years in prison for providing services the consumer is free to perform on himself.