The burdens add up. In 2011, a trio of University of Minnesota and Princeton economists estimated that occupational licensing results in 2.8 million fewer jobs and costs consumers $203 billion a year.
State lawmakers need to be made aware of these costs, said Dick Carpenter, IJ’s director of strategic research and co-author of the book Bottleneckers. The title is his term for those who use government power to block competition: “For too long, bottleneckers have gone to legislators, and the case they’ve made is that there is no cost to licensing,” he told me. “The state budget will not be harmed, and any cost will be paid by the fees that applicants pay.” In the narrowest sense, licensing boards are self-financed, Carpenter said. “But this ignores other costs, greater costs.”
Besides, it’s not a binary choice between licensing and doing nothing, he insisted. “There’s a menu of regulatory options in between”—mandatory bonding and insurance, registration, inspections, certification. Legislators should think of this menu as a continuum, Carpenter said, and go with the least restrictive option appropriate.
Once licenses are on the books, it’s hard to get them off. Trade groups and training schools that benefit from the system lobby hard to keep them in place. Often, the judicial branch has to step in, which is what happened in 2015, when the Supreme Court ruled that the North Carolina State Board of Dental Examiners had overstepped in barring anyone but dentists from performing teeth whitening. Non-dentists had been charging less for the service, and dentists flipped out. Their licensing board issued cease-and-desist letters. In 2012, Obama’s Federal Trade Commission felt moved to file a complaint about the anti-competitive behavior.
Technically, the high court’s ruling said that the board in question was not closely connected enough to the state government to enjoy its antitrust exemptions. The decision nonetheless served as a warning shot for all states to keep closer tabs on their boards and perhaps rethink their licensing regimes. “The court decision creates a sense of urgency,” Carpenter said.
It’s also opened the door for the federal government to goose states toward a saner approach. In a speech to state lawmakers on July 21, Trump’s labor secretary, Alexander Acosta, told them to get serious about repealing anti-competitive licensing practices.
Less than a week later, a gaggle of conservative lawmakers—Senators Ted Cruz, Mike Lee, and Ben Sasse, along with Representative Darrell Issa—introduced legislation that would give licensing boards immunity from antitrust suits, but only if a state dramatically reformed (read: dialed back) its licensing regime.
Even more concretely, in February, the acting head of the FTC, Maureen Ohlhausen, launched an Economic Liberty Task Force with an emphasis on curbing overbroad licensing. Education and advocacy will be a big part of the game, Ohlhausen said in her speech. But if the good-cop approach doesn’t work, the commission can go the other way, too: “When warranted, the FTC will bring enforcement actions in appropriate cases.”