Spotlight Exclusives

A Boon for Quality or Barrier to Entry: Occupational Licensing and Low-Wage Workers

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While pursuing a career in African hair braiding, Isis Brantley spent 20 years fighting regulations that stood in her way. This past January, a federal judge in Texas ruled those requirements unconstitutional.

Texas rules required Brantley to spend thousands of dollars to acquire a cosmetology license that she felt provided her few relevant skills in her specialty. Isis Brantley۪s experience, and the experiences of many other jobseekers, are sparking a growing bipartisan concern about the scope and effects of occupational licensing, especially on low-wage workers.

State-mandated occupational licensing was ruled constitutional at the close of the 19th century, empowering states to regulate and impose protective health and safety standards within the practice of medicine.

While occupational licensing has proven to be a necessary consumer protection measure for a range of professions like medicine and law, the costs and demands of licensing for other occupations like boxing promotion and hair shampooing, some argue, far outweigh any demonstrable health and safety benefits.

A recent White House report contended that “by making it harder to enter a profession, licensing can also reduce employment opportunities and lower wages for excluded workers, and increase costs for consumers.” Since 1950, the share of Americans working jobs that required occupational licensing has grown from 5 percent to 30 percent. In some states over 60 percent of low-wage professions are subject to licensing.

These requirements are often criticized for being onerous, expensive, and inconsistent. Dick M. Carpenter II of the Institute for Justice noted in an August 2014 Spotlight commentary that “in 39 [low- to moderate-income] occupations, the difference between the state that requires the least amount of education and experience and the state that requires the most is nearly three years.”

Advocates for occupation licensing suggest these requirements protect consumers from abuse and inferior servicean Oklahoma locksmith quoted by the Wall Street Journal, for example, suggested that regulations had “gotten rid of about 90% of the scammers in our state.” A Hamilton Project report argues, on the other hand, that overall, expansive licensing “imposes net costs on society with little improvement to service quality, health, and safety.”

While occupational licensing serves a clear and positive purpose in some professions, many are asking for a careful reassessment of their application in otheroften low-wageoccupations. Advocates on the left and right argue that striking a balance between consumer protection and a fair and accessible job market is crucial. Spotlight on Poverty will continue to monitor this issue and the impact of potential reforms on low-wage workers.


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