Criticism of the proliferation of occupational licensing is now bipartisan. Occupations such as dog walkers, interior designers, auctioneers and barbers do not need state licenses, and those legal restrictions serve mainly to raise prices for consumers and restrict supply, eventually limiting innovation and job creation, too.
But how to move forward? There are thousands of licenses, covering almost a third of U.S. workers, and licenses are proliferating at the city and county levels, too. Constitutional and antitrust and legal challenges to this trend are beneficial, but they bring only piecemeal victories and cannot undo the current morass of restrictions.
Maybe a court will strike down New York’s licenses for dog-walking, but in the meantime Seattle and other municipalities might license dog walkers. The machinery for creating new licenses is much better organized and funded than the institutions for getting rid of them, and once in place these requirements have natural defenders, namely those who have invested in the credentials.
(Related: Licensing Makes It Harder to Move for Work)
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.
A federal approach to these regulations would also bring standardization and uniformity across state lines, making it easier to move from one part of the country to another, and helping restore the great American tradition of mobility. As it stands now, imagine yours is a military family and you are transferred every few years or so, and your spouse works in a profession that would require relicensing. What justification could there be for such a hardship and inconvenience?
In short, the federalization of licensing would lower prices for consumers, create more jobs, and bring a net increase in economic liberty.