Lets’ face it, when it comes to the current state of politics across the nation and New Jersey, it seems we are as divided as ever. There is, however, an area of agreement that everyone from the Obama Whitehouse, Republican Senator Mike Lee, and Princeton Economics Professor Alan Kreuger agree on – occupational licensing reform.
Occupational licenses are government barriers, which require individuals to meet certain requirements before they are allowed to practice a given profession. Sometimes, these licenses make sense, such as licenses for doctors and lawyers, to protect consumers in cases where they might lack information. However, other licenses, such as the licenses for barbers or athletic trainers, either are unnecessary to protect consumers or have requirements that make little sense for the profession.
These licenses ostensibly are to protect consumers, but in reality, most serve another purpose – to protect the special interests who lobby for the creation of these licenses. By constructing barriers to working in various professions, those with the licenses are able to charge higher prices due to a lack of competition. Some even run schools or programs that are dependent on the existence of license to guarantee their profits. By removing barriers and allowing competition, New Jersey could create as many as 34,000 jobs, according to the Institute for Justice.
All these unnecessary and burdensome licenses not only are costly for those trying to create a career for themselves, but also harm the hard working families of New Jersey. The state licenses 48 moderate income professions, including everything from school sports coaches to makeup artists. These licenses raise the cost to New Jersey households almost $1200 per year. Of course, these costs aren’t distributed equally, as New Jersey households earning less or on fixed incomes are hit especially hard. It doesn’t take an economist to figure out these licenses only benefit the few at the expense of many.
Eliminating licensing requirements benefits workers, consumers, and businesses, so it is hard to see why many of these costly and inefficient licenses have not yet been abolished. The main culprits are Trenton special interest groups, which have been effective at selling horror stories of the dangers of licensing reform, despite the fact that these fears have little basis in reality.
To prevent this kind of lobbying, bipartisan substantive reform is necessary to stop the tide of harmful licenses. Thankfully, the U.S. Supreme Court has granted this opportunity with its decision in its recent ruling North Carolina State Board of Dental Examiners vs. FTC. In the case, the court ruled the state must provide “active supervision” over licensing boards to ensure they aren’t participating in monopolistic behavior. New Jersey legislators from across the aisle should seize this opportunity to provide opportunity for citizens struggling to find good paying jobs in this economic climate and to lower costs for all consumers around New Jersey.
As the 2015 White House Report on occupational licensing sums up nicely “…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.”
The data is in and there is bipartisan agreement. Now is the time to reform occupational licensing.