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Licensing Costs Our Economy $180 Billion/Year, Here Are Ways to Avoid That — License to Work Ep3 - YouTube
Channel: Institute for Justice
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Join me
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as we travel the country
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and explore licensing
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to see what it means
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for the everyday worker.
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I'm Dick Carpenter
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and this License to Work.
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Occupational licenses are often justified out of concern
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for public health and safety.
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Restaurant cooks are almost entirely unlicensed.
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Yet public health and safety implications
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of preparing food
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for paying customers are pretty obvious.
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Why are cooks unlicensed?
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Because there's a different way
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to protect health and safety
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that's just as effective
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but not nearly as restrictive as licensing.
[46]
Inspections
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To ensure public health and safety,
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municipalities routinely inspect restaurants
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instead of imposing onerous licensing on
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food preparers, waitstaff, and dishwashers.
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This more effective and efficient alternative
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to licensing is not limited to restaurants.
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Many licensed occupations
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could also be regulated by far less restrictive means
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while still protecting public health and safety.
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In fact
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there's a whole menu of alternatives to licensing.
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These range from market mechanisms
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involving no direct government intervention,
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to regulatory alternatives that,
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though they involve government,
[84]
do not stand as barriers to entering occupations
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as licensing does.
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Here are some of the more prominent ones.
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The first and least restrictive
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is market regulation.
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Until recently
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the city of Savannah, Georgia
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required that one have a
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government-issued tour guide license
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to tell tourists
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the famous Mercer house
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was never actually owned by
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songwriter Johnny Mercer,
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or to show them or a wise person once observed
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life is like a box of chocolates.
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The license required aspiring guides to pass a test,
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pay a fee,
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pass a physical examination,
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and pee in a cup
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as part of a criminal background check.
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But most tourist didn't know,
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and likely didn't even care,
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whether their tour guide was licensed...
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tour guides like Savannah Dan who's leading a tour.
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Hi, Dan!
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Hey, welcome to Savannah.
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Thank you.
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So it's the most important quality in a tour guide?
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Whether he's entertaining or interesting.
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Precisely!
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A tour guides license isn't going to tell you
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whether a tour guides entertaining or not.
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But hundreds, if not thousands, of reviews
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of satisfied customers will.
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Right.
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Consumer reviews offer a wealth of information
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about providers reputations
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in a wide range of occupations.
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Consumers use this information to weed out
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businesses that fail to provide safe or quality service.
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Companies with poor reputations either improve or
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go out of business.
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But some services are harder for consumers to judge.
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Take auto maintenance.
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Here a consumer or employer
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might want some insurance
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the mechanics know what they're doing.
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For that there's voluntary private certification
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which has worked effectively for years
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in the auto maintenance industry.
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This alternative signals to consumers and employers
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that a mechanic has a certain amount of education
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and experience.
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It does so without creating
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barriers to entry
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or stymieing consumer choice
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because it allows for freedom of occupational practice.
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Anyone is free to work without a certificate
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and consumers can choose whether certification
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matters to them.
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The next alternatives have
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some form of government involvement.
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As we discussed earlier
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inspections are pretty common but
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mandatory bonding or insurance
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is another.
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We've come here to an auction
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to talk to an expert.
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Wooden statue
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painted by Mandy Warhol
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*Auctioneer gibberish*
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Excuse me!
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80 to the man with the question.
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How would you describe
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mandatory bonding or insurance?
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Glad you asked sir
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B and I allows consumers
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to get their money back for their damages
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90 now 95
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*Auctioneer gibberish*
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Some states use B and I in lieu of licensing.
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*Auctioneer gibberish*
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California relies upon bonding
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even though 29 states force us to be licensed.
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*Auctioneer gibberish*
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Bonding protects you, sir,
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but allows us to be free from the
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burdens of licensing.
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In other words
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bonding or insurance are often better
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options than licensing.
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Yes, sir
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and sold it to the man asking all the questions.
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Even jobs like this
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can be regulated with alternatives to licensing.
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Sometimes consumers fear
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that they'll be harmed by fly-by-night providers
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that is people who promise to start a service,
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and maybe even start a service,
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but then skip town with the dough.
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This risk can be addressed through registration
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such as what Kansas requires of roofing contractors.
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With registration, service providers must notify
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state officials of their name and contact information
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before they can begin work.
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The simple act of registering with a state ensures
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that service providers can be found if necessary.
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The idea of registration may also deter bad actors.
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A final alternative is state certification,
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such as certified interior designer.
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This is like private certification
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except under state certification
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the certifying body is a government
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rather than a private organization.
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Shiplap on the left walls.
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Under state certification, like private certification,
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anyone is free to practice in an occupation.
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Let's do subway tiles on the backsplash.
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The key difference is that under state certification
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only those who have
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completed prescribed requirements are
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allowed to use a designated title.
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California for instance restricts the
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use of the title certified interior designer
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only to those who have completed
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several years of schooling and apprentices
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and passed an examination.
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Licensing is the most restrictive form
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of occupational regulation.
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It should only be used
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when no other tool will do.
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When there's real proof of harm
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that can't be mitigated by a less restrictive option.
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Too often occupational regulation
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results from economic protectionism
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from special interests trying to use
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government power to shut down competition.
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And that leads to a host of ills
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from fewer jobs to higher prices
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and it tramples on the fundamental American right
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to earn an honest living.
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Instead lawmakers should demand evidence.
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They should only impose regulation
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upon proof of a real problem
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and even then
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they should look for the least burdensome
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most targeted tool to solve that problem.
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Click on the report icon to read more
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about alternatives to licensing.
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