Should We Really Need a License to Work in California?

JobsTaking a job as a manicurist in California requires more than filling out an application and receiving an offer from an employer. Manicurists have to have at least 400 hours of training, which can cost thousands of dollars. They must also take a written and practical exam.

The government-created barrier to a career in hair care and makeup application is even higher. A cosmetologist needs 1,600 hours of state-approved training. A barber has to have 1,500 hours, according to the California Department of Consumer Affairs.

Meanwhile, a mortgage originator, who must already be a licensed broker, or salesperson, needs only 20 hours of pre-licensing education, an emergency medical technician requires 160 hours, and a crane operator doesn’t have to have any at all, according to the Hoover Institution’s David Crane. Even tree trimmers are compelled to put in more training hours than EMTs, says Dick Carpenter from the Institute of Justice.

Though occupational licenses are purported to be protections for consumers, Crane points out that “studies have consistently found that licensing laws produce no better or safer services for consumers than do less protectionist and less costly alternatives.”

Instead, an occupational license is, as the Institute for Justice has straightforwardly explained, simply “government permission to work in a particular field.” And that permission is harder to come by in California, where more than one in five workers needs a government-issued license to hold a job, than in any other state but one.

There more than 200 jobs, and maybe as many as 250, in California that require an occupational license. The National Conference of State Legislatures has said that “the tangle of laws has become so thick that a commission in California recently admitted that the state has no way of knowing how many occupations it licenses.” Whatever the number, the Goldwater Institute says it is the most of any state. Mississippi has the fewest licensed jobs, a mere 40.

Overall, California was next to last in the overall burden on the workforce by the Institute for Justice’s License to Work rankings. Those rankings considered the “number and burden of licensing requirements combined.” Only Arizona has a higher burden.

Occupational licensing has been called a “protection racket” for good reason. It shields established workers from competition from newcomers. Morris Kleiner, a University of Minnesota professor who has researched the economic consequences of occupational licensing, told the Goldwater Institute that barring competition through government licensing allows existing practitioners to charge about 15 percent more for their services.

Kleiner has also said that “the cost of licensing nationally in the form of lost jobs” is 0.5 percent to 1 percent. This would mean an additional 39,000 to 78,000 jobs in California if licensing were reduced “relative to certification or other less restrictive forms of regulation.”

An alternative to the current regime would be a policy of reciprocity. Rather than forcing workers moving in from other states to go through California’s stiff licensing requirements, the state would instead recognize those workers’ permits if California has recognized their previous state’s requirements as appropriate. Under this arrangement, “the suppliers of a licensed service can adjust to changes in demand more quickly, limiting any surges in pricing, or delays in service provision,” Pacific Research Institute fellow Wayne Winegarden wrote in “Breaking Down Barriers: How Occupational Licensing Reform Can Improve The Insurance Markets, Benefit Consumers, and Expand Job Opportunities.”

Reciprocity would also encourage, Winegarden adds, “more competitors to enter the state” which “would also benefit consumers through lower prices and higher quality.”

“In the longer-term, reciprocity and/or recognition of other states’ licenses enables states to learn from one another,” says Winegarden. “Specifically, the competitive process of suppliers from different states competing with one another will enable states to discover how to better implement the desired licensing regulations.”

This should result in lighter restrictions all around.

Furthermore, says Winegarden, “reduced licensing regulations can also remove barriers to innovation,” a benefit that would be particularly useful in California, where much of the economy depends on innovation.

There are a couple bills in the current legislative session that were written to lower the job hurdles created by occupational licensing: Assembly Bill 2483, introduced by Assemblyman Randy Voepel, and Assembly Bill 2409, introduced by Assemblyman Kevin Kiley. These should be of particular interest to those who are having a hard time making a living because they’ve been shut out by California’s existing system and want no more than to complete on a level playing field.

Kerry Jackson is a Fellow at the California Center for Reform at the Pacific Research Institute.

This article was originally published by Fox and Hounds Daily