Skip to main content

Protecting Unlicensed Occupations from Government-Sanctioned Cartels


Great care must be taken in repealing occupational licensing laws. No, not care in which licensing regimes are repealed or how quickly we are rid of them. They can all go, post haste (yes, that includes doctors and lawyers). Licensing hurts the economy to the tune of $200 Billion each year. A practitioner in a licensed field can expect to charge an unearned premium of 10-12 percent over his unlicensed peers. And licensing has shown almost no benefits in terms of improving public safety. The small benefits - such as a shorthand indicating which practitioners have received a minimum amount of training - could be better achieved through private certification without the economic harms visited by licensing regimes.  

No, the care that must be taken is in the unintended consequences of repealing individual licenses. There are times when groups of practitioners will ask the government to regulate them not because they want those sweet monopoly profits (though surely they realize such a fringe benefit) but because they fear that without such a license they will be swept into another licensed profession’s scope of practice. Many licensing boards, especially those covering a profession in which the scope of practice is closely related to the scope of practice of other licensed professions contain special waivers for other licensed professionals. So a licensed physician, social worker, or counselor, working within their sphere of expertise, will not be held to have practiced some other occupation unlicensed. 

If the legislature were to eliminate chiropractic licenses tomorrow, by Wednesday the Oklahoma Medical Board would be overrun with complaints about unlicensed practice of medicine. By Friday Physical Therapists would probably be circling as well. Both groups would see a way to eliminate a whole class of competitors, which would allow them to charge higher rates.

Since most of the state licensing boards are dominated by practitioners fears of being swallowed up by a competing board may be justified. It’s easy to imagine a group of clinical psychologists getting together and declaring that only they have the requisite knowledge to practice music therapy, given the known effects of music on mood and brain activity. Who would want to argue with such an esteemed group of experts? Especially when the penalty for unlawful practice of psychiatry comes at a price of $500 and up to 6 months in jail per day of violation.

As the legislature looks to repeal licensing regimes, it should consider these scope of practice issues. Rather than leaving a profession wholly unprotected in the face of a more powerful state-granted cartel (one recognizes their power from the fact that they will remain in place, while the less powerful regime is properly disposed of), the legislature should consider carving out the profession as not falling under the scope of practice of the powerful cartel. 

This protection should be easy to give. The licensed occupation’s definition and scope of practice could be left in place. The remaining law would then be replaced with a simple statement that anyone performing the functions described shall not be guilty of practicing any other licensed occupation without a license. To ensure that overeager cartel bosses don’t encroach, the law should indicate that the definition is to be construed broadly, so that that only someone operating well outside that definition might be violating the protectionist regime of the still-licensed occupation. 

Of course, none of this protection would be necessary if the legislature would adopt wholesale occupational licensing reform. 1889 has proposed a private certification law that would allow competing groups (competing is a key word here) to certify a given industry. Anyone who is certified by such a group is exempted from state licensure laws.

In the mean time, safeguarding newly-unlicensed practitioners will allow Oklahoma consumers to realize the benefits of the deregulated profession: a significant discount on valuable services.

Mike Davis is Research Fellow at 1889 Institute. He can be reached at mdavis@1889institute.org. 

The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.

Popular posts from this blog

1889 Institute's Statement Regarding School Closures

The 1889 Institute, an Oklahoma think tank, has released the following statement regarding Joy Hofmeister’s proposal to keep schools closed for the remainder of the school year. We at the 1889 Institute consider Joy Hofmeister’s proposal to close Oklahoma’s schools for the rest of the school year a gross overreaction to the coronavirus situation. Even in the best of times and circumstances, suddenly shifting every student in the state from traditional classrooms to online distance learning will have negative educational consequences. This in addition to the economic burden on two-earner families forced to completely reorder their lives with schools closed. We believe many of our leaders have overreacted to worst-case scenarios presented by well-intended health experts with no training or sense of proportion in weighing the collateral damage of shutting down our economy versus targeting resources to protect the truly vulnerable. We say reopen the schools and stop the madness. ...

If Licensing Protects Consumers, Why Are Licensing Laws Blatantly Anti-Consumer?

Once upon a time, there was a small island whose economy revolved around scuba-diving tourism. Unfortunately, the island elected legislators who considered scuba dangerous. Inexperienced divers would surface too quickly and get the bends. The legislature, wanting to make diving feel safer, passed a law that banned sharks in designated scuba diving zones. There were no known cases of sharks attacking divers, nor were divers being frightened into surfacing too quickly by sharks. This is what most occupational licensing schemes look like. Legislators act, giving the public a sense of security, and giving powerful industries protection from competition. The laws do almost nothing to help consumers. Not only are they futile, they are also deceptive.   Some licensing regimes, like the Oklahoma Real Estate Broker ’ s Act, take the deceit one step farther. Instead of just telling the sharks not to eat people (which they weren’t doing anyway) the act does the equivalent of gathering a group...

COVID-19 Proves Our Schools Are Social Service Centers First, Education Institutions Second

There is no way the 180-day (or 1,080 hours) school year can be completed by the end of previously established school calendars for this year given the fact that spring break has now already been effectively extended an additional two weeks. One option would have been to extend the school year into the summer. Given the level of family togetherness being experienced now, and the fact that incomes are being lost and many would be interested in making up the losses, it’s not unreasonable to expect vacation plans to be radically remade or canceled anyway. Instead, Oklahoma’s State Board of Education precipitously closed the schools and did not call for an extension of end-of-school dates. Thus, the summer option has been foreclosed. The State Board is within its rights. Oklahoma statutes (70 O.S. § 1-109 E) state, “A school district may maintain school for less than a full school year only when conditions beyond the control of school authorities make the maintenance of the term imp...

Follow the Science: Eliminate Social Distancing and Focus Resources to Protect the Vulnerable

As the country entered into an election year, COVID-19 reared its head and became an unusual campaign issue. Exposed to extreme politization, facts were buried in an abundance of misinformation perpetuated by the invocation of “science.” With the overly polarized rhetoric of stump speeches mercifully behind us, it is time to return to the rigor and integrity in research that public policy deserves. Now that the polls have closed, let’s move on, dig into the facts, and, indeed, follow the science.   Upon the outbreak of the novel coronavirus, SARS-CoV-2 and the COVID-19 illness, little was known about it. Symptomatically, it was even difficult to tell whether or not one had the disease given that the list of symptoms seemed to expand continually. Despite what little information existed, there was no lack of self-proclaimed experts claiming the knowledge necessary to contain the disease. With the state's presumptive authority and dubious expertise, numerous state and local governmen...