In a recent 1889 Institute blog, one of my colleagues discussed one suggested cure for occupational licensing: universal recognition. Its shortcomings became obvious with a bit of thought: it only helps some consumers (those close enough to the state border to be worth traveling to) and it only helps them a little bit – allowing out of state practitioners to practice in the state doesn’t boost the supply of practitioners to anything like the same degree eliminating the licensing requirements would. Sure, universal recognition makes a certain kind of sense, if you don’t think too hard about the immorality of requiring government permission to sell your labor. After all, why would a hair stylist trained in Oklahoma be lower quality than a hair stylist trained in Kansas?
But universal recognition does nothing to help two groups: potential practitioners who might be great at a trade but who perform poorly on tests, and consumers who live in the middle of big states. While there may be a few out of state practitioners who relocate once they are allowed to transfer their credentials, it is unlikely to make much difference to the cost of services.
The biggest problem with universal recognition, though, isn’t what it fails to fix; it’s that it makes licensing more difficult to eradicate in the future. Once enough states have opened the door to reciprocity, we will see a scenario where the pressure to increase the number of licensed occupations becomes a one-way ratchet. Any state who does not license an occupation will put its practitioners at a distinct disadvantage. If Kansas and Colorado license interior decorators, and Oklahoma doesn’t, then someone licensed in Kansas or Colorado can work in all three states, while an Oklahoma decorator can only work in Oklahoma. While she likely wanted Oklahoma to license interior decorators already (since it would reduce her competition), now she has extra motivation, and a more powerful argument to take to her state representatives. After all, nothing motivates state legislators more than a credible argument that residents of neighboring states are at an economic advantage.
Universal recognition has been compared to a national licensing regime, but it is actually far worse. Universal recognition creates more opportunities to create new licenses and fewer opportunities to repeal existing licenses. It plays states against one another. The legislatures most predisposed to expanding licensing will be able to force the hands of all their neighboring state legislatures. This will create a domino effect whereby every state must license any occupation that any nearby state licenses, eventually spreading to all 48 contiguous states.
So how is it that our movement, full of people we know to be both well-intentioned and generally in favor of repealing licensing, has fallen into the trap of universal recognition? Remember, they are not only failing to fight it, they are pushing it. The only explanation is that they have put too much focus on the storytelling side of advocacy. Certainly, it is easy to relate to military spouses who are unable to use their training and experience in a licensed profession as they are dragged from station to station across the country. It should be easier for these professionals to work. And their stories, when told to legislators, make a compelling case for reform.
Humans respond to storytelling, and especially to stories of suffering where they could help alleviate the misery. That is why advocates often put a human face on their reform efforts. But when the focus is too much on these personal stories, it can detract from the best policy. A compromise that is terrible overall starts to look like an easy win when viewed only from the perspective of the “face” of the issue. In this case, the human story has betrayed the policy reforms it was meant to serve, making the best reforms impossible to achieve. Military families certainly deserve better than our licensing regimes give them, but they are only one small part of the story.
Licensing regimes are perhaps the most under-appreciated threats to our economy. In 2017, the Institute for Justice estimated that licensing cost consumers more than $200 Billion each year. A National Bureau of Economic Research study estimates a 17-27% decline in the availability of labor in licensed industries. These are catastrophic numbers.
Eliminating licensing, or implanting private certification, would improve life for military families, two-earner households that move across state lines, and for the service-consuming public (i.e. everyone). Universal licensing helps a small portion of these groups at the expense of the rest. Focusing too much attention on the face of the story has led to that face gaining while the group it was intended to help loses. Advocates need to keep the big picture in mind when forming new policy recommendations. Legislators need to learn what the big picture is before implementing policy changes to help the “face” of an issue.
The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.