“First in shoes, first in booze, and last in the American League” people used to say about the St. Louis Browns. Statewide, Missouri might not be first in booze and shoes, but at least there is one category in which the state can be proud to rank lowest in the United States: the total number of occupational licensing regulations. According to a 2007 Reason Foundation study, Missouri requires licenses for the least number of occupations, out of all 50 states. This is significant, because fewer licensing regulations means that goods and services are cheaper for consumers, and fewer job seekers have to ask the government’s permission before working in the occupations of their choosing.
Occupational licensing regulations require those who wish to practice in a particular profession to obtain some type of special permit or license, beyond a general business license, from the government. The Reason Foundation’s report on this subject last year found that Missouri requires licenses for only 41 occupations, compared to a national average of 92. Further research has revealed that Missouri’s actual number of licensed occupations is somewhat higher than reported, but because the state placed last by a significant margin, and because it’s also difficult to determine an exact number in each of the other states, Missouri’s position is secure. There are fewer instances here in which someone who merely wants to be productive first needs a permission slip from a board or commission.
The examples of occupational licensing in Missouri range from the common (surgeons and lawyers) to the unnecessary (interior designers), to the silly (barbers), to the ridiculous (auctioneers and hair braiders). It is abject lunacy that young women who would like to perform African-style hair braiding in Missouri must first undergo hundreds of hours of cosmetology training for skills they will never need to use. Absolutely nothing is gained by such regulation, other than protecting the interests of established cosmetologists by enacting barriers to those wishing to perform only hair braiding for a fee. That protectionism is precisely the point.
Licensing laws are virtually always enacted, or made more stringent, because existing practitioners of a profession lobby for the regulations, not because customer complaints or safety concerns necessitate them. Moreover, current practitioners are typically “grandfathered” in, so that they do not have to meet the new stricter standards that are imposed on their future competitors. These regulations increase the costs of entering a profession, so existing practitioners can charge higher prices – and earn higher profits – than they otherwise would in a truly free market. Thus, occupational licensing laws are born of special interests, not the public interest. In short, licensure raises prices and harms consumers.
Some worry that practitioners without a government-granted license would tend to be more reckless, endangering consumers, but numerous economic studies have shown that government licensing standards do not improve consumer health and safety. In fact, licensing often causes consumer safety, and the quality of products or services, to decrease. This is because licensing requirements are often arbitrary and not necessarily related to practical job skills or knowledge, and the false sense of security that a license provides can cause customers to be less discriminating. In addition, the artificially higher prices that licensed practitioners charge have marketwide consequences, causing some people to resort to more dangerous do-it-yourself work, reduce their medical visits, or resort to black markets. This explains why, for example, electrocution rates are higher in places with stricter electrician licensing laws, and why states with stricter dental licensing laws have a higher incidence of poor dental hygiene.
Fewer occupational licenses means more opportunity for employment, lower professional entry costs, more competition, and greater choice for consumers. In this distressed economic climate, it is more important than ever to encourage entrepreneurship and remove regulatory barriers to work. State and local officials should refuse future attempts to license other professions, and should make every attempt to reduce the number of occupations that are currently licensed. This would lead to even more freedom and prosperity for Missourians.