Cut Crime By Repealing Useless Occupational Licensing Regulations

By Hans Bader of CEI.

"People are more likely to commit crimes if they can’t find a job after being released from prison, according to a study released by the Manhattan Institute. Occupational licensing regulations make it harder for them to find a job. Reason magazine notes that a ten-year study released last year by the Center for the Study of Economic Liberty at Arizona State University found that “formerly incarcerated residents are more likely to commit a new crime within three years of being released from prison if they live in a state where they’re prohibited from getting a license solely for having a criminal record.”

Once upon a time, occupational licensing regulations only restricted access to jobs that had unique privileges (such as lawyers, who can send you a subpoena demanding your diary) or that had unique public safety implications (like a surgeon, who can kill you if unqualified). Not anymore.

Now, many occupations that pose no special risks or need for regulation are off-limits to people who have criminal convictions, or never committed a crime, but can’t afford to spend years on unnecessary training that is sometimes irrelevant or obsolete. Florida requires interior designers to undergo six years of training, including two years at a state-approved college. Other states force aspiring hair stylists to first attend exploitative beauty schools that often rip off their students. And “twenty-one states require a license for travel guides,” notes the Brookings Institution. Occupational licensing has expanded from covering 5% of the workforce in the 1950s to 30% today.

So there is no reason an ex-con should not be able to hold many of the jobs now off-limits to them due to occupational licensing regulations. It’s not as if consumers benefit. As Ramesh Ponnuru of the American Enterprise Institute notes, researchers have not “found that licensing requirements are effective at improving the quality of service.” Indeed, according to Morris Kleiner of the University of Minnesota, occupational licensing has either no impact or even a negative impact on the quality of services provided to customers.

So they don’t protect consumers, for the most part. But they increase prices for consumers; indeed, a White House report during the Obama administration notes that “the evidence on licensing’s effects on prices is unequivocal: many studies find that more restrictive licensing laws lead to higher prices for consumers.”

As Ponnuru notes, occupation licensing rules raise prices for consumers, and cut the “wages for the people they exclude. More restrictive requirements to become a nurse practitioner, for example, increase the price of a child’s medical exam by as much as 16 percent.” As the White House report pointed out, there is an enormous variety and inconsistency in state licensing requirements—more than 1,100 occupations are regulated in at least one state, but fewer than 60 are regulated in every state—which hinders interstate mobility. As the Brookings Institution has noted, licensing restrictions are not keyed to public safety at all, since “across all states, interior designers, barbers, cosmetologists, and manicurists all face greater average licensing requirements than do EMTs.”

Trimming occupational licensing laws is a better way to help people with criminal records get jobs than alternatives local governments have tried in recent years. Rather than get rid of occupational licensing laws that cause needless suffering, nine states have sought to force private employers to hire people with criminal records for jobs that don’t require licenses, by banning them from asking applicants whether they have a criminal record before extending a job offer. But this coercive approach seems to harm innocent people while doing little to help people with criminal records. As The Atlantic noted in 2016, “banning the box may actually be hurting some of the exact groups of people it was designed to help, according to a few new studies.” Indeed, “[in] a recent paper from the National Bureau of Economic Research, Jennifer L. Doleac of the University of Virginia's Frank Batten School of Leadership and Public Policy and Benjamin Hansen of the University of Oregon looked at how the implementation of ban-the-box policies affected the probability of employment for young, low-skilled, black and Hispanic men. They found that ban-the-box policies decreased the probability of being employed by 5.1 percent for young, low-skilled black men...That’s because, they say, when employers cannot access an applicant’s criminal history, they instead discriminate more broadly against demographic groups that are more likely to have a criminal record.”"