Coast in early 2015, Matt and Eric canvased neighborhoods and shoveled snow for money, until they were stopped by police. Nathan set up a hotdog stand to raise money to help his disabled parents—his mom has epilepsy and his dad has multiple sclerosis. Within ten minutes of opening his stand, a zoning official closed him down because he was competing with nearby restaurants. Madison sought to sell Christmas mistletoe in a local park to pay for her braces. She was told that while she could not sell her wares without a license, she was free to beg for money.
“I don’t want to beg!” Madison exclaimed. “I would rather work for something than beg.”4 “People should be able to work for a living,” she argued.5 “The city laws are supporting begging and are against working.”6
Madison didn’t know how right she was. In that one statement, the eleven-year-old described one of the most significant labor economics problems in the United States today. In cities, counties, and states across the country, codebooks are stuffed with laws prohibiting people from working—many laws, like those that shut down Matt, Eric, Nathan, Madison, and countless young lemonade stand entrepreneurs each year, doing so for no rational reason.7
It’s called occupational licensure. Simply put, an occupational license is a government-issued permission slip allowing a person to work. Although some occupational and professional licenses are familiar, such as those for physicians or attorneys, others are less well known, such as those for interior designers, locksmiths, auctioneers, sign language interpreters, music therapists, florists, and many other occupations.8
States (and sometimes cities or counties) require that people wishing to work in such occupations go through often-arbitrary anticompetitive hurdles, like completing mandatory education and training, passing examinations, paying fees, and reaching a prescribed age. Those who cannot clear the required hurdles are prohibited from working in the occupation. Because these hurdles are often purposefully high, occupational licensing is a rare public policy that accomplishes precisely what it sets out to do—keep people out of the occupation.
States that license interior designers, for example, require six years of education and experience, successful passage of a costly national examination, and payment of several hundred dollars in fees to the state.9 One nationwide study looking at the burdens associated with earning a license to work in more than one hundred low- and middle-income occupations estimated that on average would-be workers spend about nine months in education and training, pay more than $200 in fees, and must pass at least one examination.10 The result is fewer economic opportunities for workers and entrepreneurs, fewer choices and higher prices for consumers, and artificially inflated wages and profits for those already in the industry.
Historically, the interruption of the flow of workers into occupations effected by licensing successfully preserved the advantages of those already at work in those occupations. And the economic advantages of licensing—for the licensed—have not gone unnoticed. In 1776, the economist Adam Smith observed that trades conspire to reduce the availability of skilled craftspeople in order to raise wages.11 At that time, the mechanism for accomplishing this was a guild system12 in which a group of craftspeople who were engaged in the same occupation would create—in association with town councils and other civic structures—an exclusive regimented organization to maintain a monopoly on a particular craft, by shutting out anyone who was not a guild member.13
After 240 years, it seems that little has changed. By the 1940s, some observers were already comparing occupational licensing in the United States to the medieval guild system,14 and that was even before the explosion of new licenses in the latter half of the twentieth century. Indeed, in the 1950s one in twenty workers in the United States needed a government-issued license to work, and some estimates put that number at almost one in three today.15
And like the medieval guild system, new licenses are created by governments at the request of those already working within an industry, typically through professional associations. Currently, those already working in an occupation (the modern equivalent of craftspeople) often band together and work in association with legislators (the equivalent of town councils and other civic structures) to create a regimented license to shut out those who have not completed the designated requirements (i.e., nonguild members) in order to maintain a monopoly over their occupation. Representatives of those associations often warn of hyperbolic threats to public health and safety from the specter of unregulated practice—illustrating the need for licensing with a few doomsday anecdotes and no empirical evidence—and conveniently provide sample licensing legislation written by the association. Since occupational licensing is primarily handed out at the state level, it is a process repeated in one state capitol after another, usually as part of a deliberate campaign to regulate the industry.
In just one example, the American Music Therapy Association (AMTA) and its sister organization, the Certification Board for Music Therapists (CBMT), have mounted a nationwide campaign to license the practice of music therapy in order to “[protect] clients or patients from potential harm or misrepresentation from individuals that are not board certified music therapists and are not practicing under the CBMT Scope of Practice.”16
A music therapist, according to the Dictionary of Occupational Titles, “directs and participates in instrumental and vocal music activities designed to meet patients’ physical or psychological needs, such as solo or group singing, rhythmic and other creative music activities, music listening, or attending concerts.”17 Regardless of what one thinks of the value of this work, the unregulated practice of music therapy hardly poses a threat to public health and safety. Although it had been practiced freely and safely for years, licenses have recently been adopted in the field, not at the request of harmed or concerned consumers but rather as an exclusive result of the actions of professional associations.
Through the advocacy efforts of a “regulatory affairs” team, the AMTA and the CBMT coordinated state-based task forces to introduce legislation for the creation of music therapy licenses.18 To date, three states have passed such regulation—Nevada, North Dakota, and, most recently, Georgia. Georgia’s adoption of this legislation neatly illustrates the previously described process wherein industry representatives run to the legislature for protection.
Upon its introduction, Georgia Senate Bill 414 was sent to the Senate Health and Human Services committee, which heard testimony from the AMTA in favor of the bill and received a packet containing several letters of support from music therapists, parents of children who were receiving music therapy, and a professor of music therapy at Georgia College.19 No one testified against the bill; no empirical evidence was presented demonstrating a genuine threat to public health and safety from the unregulated practice of music therapy; and no one asked about the potential economic consequences to consumers in the form of higher prices. As a result, working as a music therapist in Georgia now requires:
• obtaining a bachelor’s degree in music therapy or higher from a program approved by the AMTA, the very entity that lobbied for the bill;
• successfully completing 1,200 hours of clinical training, with at least 180 hours of preinternship experiences and at least 900 hours of internship experiences;
• passing the examination for board certification offered by the CBMT, which costs $325 to take;20
• paying various fees;
• being at least eighteen years of age; and
• passing a criminal background check.21
Consumers in Georgia, North Dakota, Nevada, and any other state that adopts this law could pay as much as 15 percent more for the services of a music therapist,22 with no evidence that the cost will be offset by increased protection for the public. Should a
