Hate unions, but love your occupational license?

The decline of union membership and public support for labor unions has corresponded rather precisely to the rise in the percentage of Americans who hold occupational licenses.

Occupational licensing would not have grown without broad support. Here’s an economist’s explanation of why:

Governmental officials benefit from the electoral and monetary support of the regulated, as well as the support of the general public, whose members think that regulation results in quality improvement, especially when it comes to reducing substandard services or protecting public health and safety.

In Missouri, the Division of Professional Registration keeps track of more than 40 occupations for which state-issued licenses are required. In addition to occupations under the Division of Professional Regulation, licensing of lawyers is a function of the Missouri Supreme Court and educators are licensed by the Missouri Department of Elementary and Secondary Education. Licensing for other occupations, such as stockbrokers and airline pilots and aircraft mechanics, is handled by federal agencies. Each regulated occupation supports lobbyists who attempt to influence the regulatory burden on the licensees.

The composition of the Missouri Senate suggests that occupational licensing is firmly implanted. My review of their official biographies indicates that of the 34 senators, only 10 members do not hold some kind of occupational license or do not work in a business (such as a car dealership) requiring a state or federal license. Eight senators are lawyers, four are bankers, two are stockbrokers or financial advisors, three are or have been educators. Only two are members of trade unions. In the Missouri House, 20 of the 163 members are attorneys.

Three decades ago, near 30% of the labor force was unionized, which has fallen to less than 5%. Today, nearly 29% of the labor force holds some sort of government-issued license. There is probably some overlap, in which holders of licenses are members of trade unions, having the right of collective bargaining under federal law. A skeptical overview of the economics of occupational licensing sums up its costs this way:

Occupational regulation has limited consumer choice, raised consumer costs, increased practitioner income, limited practitioner mobility, and deprived the poor of adequate services—all without demonstrated improvements in the quality or safety of the licensed activities.

I don’t really care whether the person who cuts my hair has a state license; if someone is going to cut me open, I’ll take comfort in any kind of assurance, even a piece of paper issued by a state board. Licensing of lawyers and car dealers doesn’t eliminate crooks, though it may make them easier to track. Whether licensing reduces the proportion of charlatans or increases competence is anybody’s guess. We’ve all had experiences with incompetent people who hold licenses.

The decline of the political power of labor unions and the rise of occupational licensing may also reflect changes in the economy generally, as the proportion of the labor force engaged jobs in primary (agriculture and natural resource extraction) and secondary (manufacturing, construction and transportation) industries have been supplanted by jobs in service occupations, which tend to be in government, small businesses or large retailers. Some large retailers, such as Walmart, have been able to effectively combat the unionization of their workers.

Undoubtedly, there are benefits of occupational licensing, though the benefits are difficult to measure. Would you give up your own license to benefit the economy in general?