Early Americans Recognized Occupational Licensing Was a Racket

Americans interested in reducing government inefficiencies a la DOGE should examine state occupational licensing laws (OLLs). Most such laws aid those who can afford to meet licensure requirements, credentialing organizations, and the bureaucrats that administer the resulting maze of rules and regulations.

The result is reduced competition, which means lower service quality and increased consumer prices. Moreover, comparative studies often show OLLs do no better job protecting consumers than market mechanisms do.

OLLs require individuals to obtain some set of credentials—a combination of education, training, and experience—to lawfully engage in various occupations, from braiding hair to performing surgery and arranging flowers to flying airplanes. Most Americans intuit that requiring florists or barbers to obtain formal credentials, which can run into hundreds of hours and tens of thousands of dollars, is overkill because nobody ever died from a bad haircut or ugly arrangement of flowers. Market forces like consumer reviews will induce bad barbers and florists to issue refunds, improve their skills, or find another occupation.

Those who favor OLLs often claim that America licensed trivial occupations, including grocers and tavern keepers, throughout its history—even back into the colonial era. An extensive recent review of state licensing statutes passed before the U.S. Civil War, however, revealed that increasing government revenue, not quality assurance, motivated almost all such early licensing. “License” and “tax” were, in other words, almost synonymous. If governments could not stop “sins” like alcohol consumption, gambling, and prostitution, they could at least tax them!

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