Occupational Licensing—The Hidden Drag on Our Economy

Occupational licensing—the legal requirement that people register, obtain training, and pay a fee prior to being able to perform certain jobs—is an often-overlooked drag on our economy. Nearly 30% of workers in the United States need some type of license to do their job (legally). These restrictions serve as a barrier to entry for entrepreneurs and laborers that we’ve simply come to accept. Nevertheless, licensing requirements cost our economy over $200 billion annually.

Even though many think tanks and economists have broached this issue, including former Fed Chair Alan Greenspan in his new book Capitalism in America, most people remain ignorant of the harm of these regulations. We fix that in this episode, which aims to shine a light on a useless and detrimental impediment to creating a more competitive marketplace.

Episode Notes, Sources and Corrections

Keith cites a Brookings study that suggests nearly 30% of all workers need an occupational license. That study can be found here.

Keith cites the “Kleiner” study, which indicates the cost of occupational licensing is $203 billion annually. That’s the cost to consumers as determined in A Proposal to Encourage States to Rationalize Occupational Licensing Practices by Morris Kleiner (University of Minnesota), Alan Krueger (Princeton), and Alexandre Mas (Princeton), all of whom are members of the National Bureau of Economic Research. That study, which can be downloaded here, has been frequently cited by both the Institute for Justice and the Brookings Institution.A

The fee for the Gulf shrimp unloading license that Keith mentions is a whopping $1,485.

We pan Connecticut’s AV installation license, which is called Television, Radio and Electronics Technician License.

Remington’s “Senator, we sell ads” quip refers to Mark Zuckerberg’s testimony before the Senate last year. Sen. Orrin Hatch asks Mr. Zuckerberg how Facebook can be free, to which Mr. Zuckerberg replies matter-of-factly: “Senator, we run ads,” exposing the government’s gross digital ignorance.

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