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The Unseen Consequences of Occupational Licensing


Published on: January 2, 2020

Occupational licensing is supposed to protect consumers, but instead it inhibits competition and further entrenches incumbents in the market. Under the guise of consumer safety, occupational licenses require costly classes or fees before workers may join certain professions. Many professions now require licenses even though they do not put consumers at risk.

Discussion Questions:

  1. What percentage of occupations should require licenses?
  2. What licenses exist that should be abolished?

Additional resources:

  • Read “Occupational Licensing Is a Bad Idea” by David Henderson, available here.
  • Read “Uber and Occupational Licenses” by John Cochrane, available here.
  • Read “My Short Case against Occupational Licensing” by David Henderson, available here.
View Transcript


The stated purpose of occupational licensing is to protect cosumers. 

These licenses often require people to take classes and pay costly fees before workers may join certain professions. 

But some states require licenses for hair braiding, coffin making, or even fortune telling... professions that don’t put consumers at risk. 

In these instances, the rules are less about consumer protection and more about protecting existing providers by stopping competition. 

That’s why the strongest supporters for these requirements are typically those already in an industry. 

They lobby for new rules that apply only to potential entrants. 

These requirements drive up prices, helping current workers, but hurting consumers and job seekers. 

There are better ways to protect consumers without creating barriers to work. 

Online review sites help consumers find high-quality and low-price goods and services. 

Consumers can also look for workers and businesses that earn optional certifications, which don’t bar job seekers from entering a profession if they don’t have one. 

Removing burdensome licensing requirements would make finding a job easier and increase choice and reduce prices for consumers.