Regulation of providers of local services–barbers, real estate brokers, taxi cabs, etc.–is traditionally a function of state and local governments. Not discerning any great effect on interstate commerce (i. e., no significant campaign contributions), the United States Congress has stayed out of this field.
Many economists and politicians, especially those with a libertarian bent, wonder why a manicurist or a hair braider, needs a license. Restrictions on entry into an occupation protect the license holders from competition and allow them to raise their prices.
I have read that at the peak 17% of the United States labor force was in trade unions. Now, about the same percentage has occupational or professional licenses, while trade unions have lost their clout and amount to 3% of the labor force. My guess is that those who hold occupational licenses are more likely to vote Republican, while trade union members once gave great power to the Democratic Party.
Tyler Cowen, an affable academic economist with a libertarian outlook, advances the argument in a recent Bloomberg column, that federal regulation of these occupations would be a better alternative than allowing state and local regulation to continue:
My radical proposal is therefore for the federal government to preempt as much occupational licensing as is possible. That’s right, these functions would be taken away from the state and local governments.
Unfortunately, I don’t expect the federal bureaucracy to usher in the reign of Milton Friedman’s Chicago School economics. But the federal regulatory process would likely pay less heed to local special interests, and it would produce a more homogenized and less idiosyncratic body of regulatory law more geared toward the most important cases, such as medicine and child care. The federal government is less likely than many state and local governments to obsess over licensing rules for fortune tellers, florists and athletic trainers.
Keep in mind that the alternative to my suggestion is not the status quo but rather a regime where occupational licensing becomes progressively worse at multiple levels of government. The defense of liberty requires changes, and sometimes that means recognizing that small, local governments are infringing upon our rights rather than protecting them.