Obama Supports Worker Freedom?

Occupational licensing occurs when the state government legislates that a person cannot practice a trade — for example, law, medicine, or hair-braiding — without a license. For years, libertarian and conservative researchers have recognized that occupational licensing increases costs and reduces choices for consumers, and prevents entrepreneurs from entering the market.

Now look who’s joined the ranks of critics of occupational licensing: President Obama! In a welcome report bearing the imprimatur of the White House, the Department of the Treasury, the Council of Economic Advisers, and the Department of Labor note that:

Over the past several decades, the share of U.S. workers holding an occupational license has grown sharply. When designed and implemented carefully, licensing can offer important health and safety protections to consumers, as well as benefits to workers. However, the current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as State certification, may offer a better balance between consumer protections and flexibility for workers.

The report comprises a thorough literature review and original research on the consequences of the current regime of occupational licensing in the U.S. This is especially important in health care.

As shown in Figure 3, the proportion of workers in health care and education has increased from about 13 percent of the workforce to 22 percent. As shown in Figure 4, health care has the highest proportion of workers subject to occupational licensing.