Nearly two in five workers in the U.S. need government permission just to do their jobs. One of the ways that permission is granted is through occupational licensing programs imposed by state and local governments. This setup raises barriers to entry for many professions.
The supposed justification for these rules is that they help protect public health and safety by ensuring only highly qualified and well-trained professionals enter a job market. You don’t want poorly trained surgeons conducting open-heart surgery, for instance. But it’s often the case that occupational licensing restrictions are placed on jobs that don’t hold any inherent risk to public safety at all. As a result, licensing requirements arbitrarily raise barriers to entry that end up preventing people from finding employment and unfairly protect an industry’s established players from market competition.
That’s why policy analysts on all sides of the political spectrum have described occupational licensing as nothing short of a “racket.”
Here are just three especially egregious occupational licensing requirements in Illinois.
Want to become a barber in Illinois? Get ready to go back to school. The Barber, Cosmetology, Esthetics, Hair Braiding, and Nail Technology Act of 1985 mandates not only a licensing exam and fees, but training at a Barber or Cosmetology school for no less than 1,500 hours in a program lasting at least nine months before you can even take the exam. Tuition at these schools averages between $10,000 and $20,000 per year according to one survey, with prices on the higher end in major cities like Chicago.
It’s difficult to make a convincing public policy case for why unlicensed barbers are a public health or safety risk. There’s nothing all that dangerous about cutting hair. If someone gets a bad haircut, it’s simple enough to just leave a bad review on Yelp and punish the company with the loss of your business and bad publicity. Other nations, such as the United Kingdom, leave barbers and hairdressers completely unregulated, and they manage perfectly well.
There’s also a state board that controls entry into hair-related professions. The Barber, Cosmetology, Esthetics, Hair Braiding, and Nail Technology board, made up of members of those industries, helps set regulations for the field. Thus, it is in their interest to maintain high barriers to entry to protect their market share and restrict competition. Regulatory capture is a well–documented phenomenon at all levels of government, where members in a field supposedly regulated in the public interest get to write their own rules for their own benefit at the expense of competitors.
2. Sign-language interpreters
Most people wouldn’t think it’s necessary to license a sign language interpreter. It’s extraordinarily improbable for one to get a job, much less maintain it, without mastery of the language. Most people would be able to catch an inept interpreter from basic context clues alone.
Yet the Interpreter for the Deaf Licensure Act of 2007 regulates this profession. Interpreters have to register with the state, pay fees and have a high school diploma (which has no connection to one’s ability to interpret), among other requirements. The act does accept some forms of private certification as evidence of professional competence. But this is just further proof of why a state registration is unnecessary, since any professional employer would already be aware of most kinds of sign language certification and would likely require them on their own.
Licensing interpreters hasn’t become popular yet; Illinois is one of only 16 states with these types of restrictions, according to an Institute for Justice study. And if most other states don’t find a reason to regulate a field, that’s one indication it’s not critical to public health or safety, and instead exists solely to restrict competition.
Chicago is already a notoriously difficult place to start a business. In fact, it’s so bad that some businesses owners have to hire “expediters” just to file all the necessary permits and keep them in compliance with the endless regulatory requirements the city forces on them.
You would think the fact that this job even exists would be enough to make Chicago lighten its regulatory burden. You’d be wrong. Never to miss a chance to fleece more taxpayers, the city of Chicago decided it needed to license expediters too, making it even harder to start a business than it already was.
If you want to become an expediter you need to get general liability insurance covering $300,000, pay a license fee of $250, and submit to the standard regimen of background checks and fingerprinting. Keep in mind, it also takes an average of 32 days to start a professional services business in Chicago, compared to just four days in St. Louis or six days in Dallas, so be prepared to wait.
While these few examples are especially bad, there are plenty of other professions where occupational licensing makes it difficult to start a business and restricts competition. The Institute for Justice conducted a national study in 2012 that highlighted excessive licensing rules in every state, including Illinois.
If our state wants to get back on the track to economic competitiveness, repealing unnecessary licensing requirements would be a good place to start.