New IJ study details costs of increased licensing

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Cost of increased licensing

The government licenses more than two million jobs in Texas at an overall cost to the economy of nearly 144,000 jobs and $13 billion, according to a new study by a libertarian public interest legal group.

Nationally, governments license an estimated 25.5 million workers, 19 percent of the American workforce. The barriers to entry created by licensing cost nearly two million jobs and nearly $200 billion a year in misdirected training, education and licensing fees, the Institute for Justice study says.

Licensing by the state has long been an accepted way of maintaining standards for doctors, lawyers and in other professions where public safety and well being are at stake. However, where one in 20 jobs required a license 50 years ago, as many as one in four do today in several states and one in five in Texas, according to the study.

The Institute for Justice is the leader in a move to pare back licensing that has over the past several years gained national momentum. The National Conference of State Legislatures, recognizing the challenge, launched the Occupational Licensing Project early this year, with a database tracking lawsuits and court decisions.

A 2015 Supreme Court decision that found a licensing board in North Carolina anti-competitive has opened the door to challenges of licensing for occupations as common as dentistry and arcane as eyebrow threading.

In response, an Ohio lawmaker late last month filed a bill that would require the legislature in that state to do a comprehensive review of all licensing boards to determine whether the licensing protected public safety or served the interests of the industries being licensed.

Morris Kleiner, “intellectual godfather” of occupational licensing reform, said his latest IJ study for the first time allows lawmakers to see the economic burden on workers and consumers.

At an NCSL-hosted licensing consortium late last month in Clearwater, Fla., Kleiner told The Texas Monitor the problem of licensing as economic protectionism was recognized by the Obama Administration and reform is a priority for the Trump administration, particularly his daughter and aide Ivanka.

The scaling back of occupational licensing at the state level moves slowly, Kleiner said, because as a California Law Review study last year pointed out, nearly all of the 1,790 licensing boards in the U.S. essentially license themselves, like “foxes at the henhouse.”

“You have very powerful interests at work, groups and associations going against individuals, many of them at the entry level of the economy, with no pushback from politicians.”

Leonard Aguilar, executive director of the Texas State Building and Construction Trades Council, has been one of the state’s staunchest critics of licensing reform and of the work of the Institute for Justice.

Like nearly all advocates, Aguilar says licensing exists to protect public health and safety. “When Texas didn’t have such regulations, our state could be a more dangerous place because of fraudulent work or just plain incompetence,” Aguilar wrote in the Austin American-Statesman this past summer.

But in the same op-ed, he acknowledged the gray area where Kleiner and the reformers are fighting. “Not every license in Texas protects lives or promotes health and safety, but all address important consumer interests.”

The state’s Sunset Advisory Commission staff disagreed with Aguilar’s conclusion in one instance. Its November report called for the abolition of the Texas Board of Professional Geoscientists, which currently licenses roughly 4,500 geoscientists and geoscience companies. “State regulation of geoscientists provides no measurable public benefit and should be discontinued,” was the central point of the report.

The commission voted to continue the geoscientist board for another six years.

It took years and a U.S. Supreme Court ruling in favor of an Institute for Justice client to get the trade of hair braiding deregulated in early 2015. That June, the Texas Supreme Court found the Texas Department of Licensing and Regulation in violation of the state constitution for licensing eyebrow threading, a way of removing eyebrow hair.

In both cases, the courts agreed the licensing provided no protection for the public, only hundreds of hours and hundreds of dollars worth of state-sanctioned training.

Arif Panju, the IJ attorney in Austin who argued the hair braiding case before the high court, told The Texas Monitor elected officials don’t often pay attention to occupational licensing legislation because they have “outsourced the licensing policies, blindly delegating them to the vested interests.”

The new IJ study, Panju said, “lifts the veil on what consumers get in return for all this licensing. There is little empirical evidence that licensing improves the quality of the work or improves public health and safety.”

There is an economic incentive for associations to create barriers to entry into professions that in their growth alone would reduce the cost of the service being offered, Panju said. Licensing, in effect, creates occupational monopolies, he said.

Panju said IJ would be working with the new chairman of the state Senate Business and Commerce Committee to support any new occupational licensing reform bills in this next session. Gov. Greg Abbott has long supported such licensing reform.

In the meantime, attorneys for the institute have once again taken up the case of Ron Hines, a retired Brownsville veterinarian, who first ran afoul of the state’s veterinary licensing regulations in 2013 by offering advice for a small fee through his website.

The State Board of Veterinary Medical Examiners said Hines was violating its licensing rules that prohibited him from having an opinion without examining the animal in person. The state placed Hines on probation for a year and ordered him to stop giving advice via the website.

The Fifth U.S. Circuit Court of Appeals ruled against Hines and IJ, but the U.S. Supreme Court in a ruling earlier this year said professional advice like Hines’ is protected speech. The Institute for Justice filed suit again in October, based on the new ruling.

Hines, who is listed as a wildlife rehabilitator for the Texas Parks and Wildlife Department, told The Texas Monitor he is 75, has been a veterinarian for 50 years, and is not in good health. But he said he was prepared to go to court again to help effect licensing reform for “young vets who might want to do this.”

“It’s a tough time for my profession, losing revenue streams to online medicine,” Hines said. “But I’m disappointed that my professional has stooped so low as to put a financial situation ahead of the welfare of dogs and cats.”

Mark Lisheron can be reached at [email protected]

7 COMMENTS

  1. Thought the Republicans wanted to get Government out of people’s lives. I guess it’s unless there’s money to be made. Go Republicans, stick it to them. Take it like a MAN bend over. Hahaha, thanks again Texas for believing their Lies.

  2. so you can justify licenses for professional and medical services but yo need a licence for almost any business including mowing lawns.

  3. Where is the evidence for 13 Billion in revenue? If you want to go to an unlicensed dentist, be my guest but don’t expect any sympathy. I expect better writing than this hack job from Texas Monitor.

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