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 No, not care in which licensing regimes are repealed or how quickly we are rid of them.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

Present Reforms to Keep the Ghost of State Questions Past from Creating Future Headaches

Oklahoma, like many western states, allows its citizens to directly participate in the democratic process through citizen initiatives and referendums. In a referendum, the legislature directs a question to the people — usually to modify the state constitution, since the legislature can change statutes itself. An initiative requires no legislative involvement, but is initiated by the people via signature gathering, and can be used to modify statute or amend the constitution. Collectively, the initiatives and referendums that make it onto the ballot are known as State Questions.   Recently, there have been calls to make it more difficult to amend the constitution. At least two proposals are being discussed. One would diversify the signature requirement by demanding that a proportional amount of signatures come from each region of the state. The other would require a sixty percent majority to adopt a constitutional amendment rather than the fifty percent plus one currently in place. ...

Is Education No Longer the Primary Mission of Our Public Schools?

Did you know that the state of Oklahoma is currently experiencing not one, but two pandemics? Until yesterday, neither did I. According to the Oklahoma City School District, the state is currently experiencing the “dual pandemics of COVID-19 and Systemic Racism,” and has decided to spend valuable time and resources to ensure that their teachers learn how to “practice alternative ways of relating to…[their]students.” In the meantime, teachers are supposed to conduct their classes online   into November. Unfortunately, if the District doesn’t adequately prepare their teachers to use the available online learning platforms, it won’t matter how woke they are, they won’t be interacting with their students at all.   At this point, we really have no idea what the school year will look like, and school districts have given little basis for optimism that students will actually learn anything. Oklahoma City public schools closed in March and “went online.” However, due to lack of suffi...

About Those Roads in Texas

A s Sooner fans head south for the OU-Texas game next week, they will encounter a phenomenon most of us are familiar with: as you cruise across the Red River suddenly the road gets noticeably smoother. The painted lane stripes get a little brighter and the roadside “Welcome to Texas” visitors’ center gleams in the sunlight, a modern and well-maintained reminder of how much more money the Lonestar State spends on public infrastructure than little old Oklahoma. Or does it? Why are the roads so much, well… better in Texas? Turns out, it isn’t the amount of money spent, at least not when compared to the overall size of the state’s economy and personal income of its inhabitants. Research conducted by 1889 Institute’s Byron Schlomach reveals that Oklahoma actually spends significantly more on roads than Texas as a percentage of both state GDP and personal income . And that was data from 2016, before Oklahoma’s tax and spending increases of recent years. The gap is likely gr...

Why Does Oklahoma License Polygraph Examiners?

Should polygraph examiners be licensed? In Oklahoma, a license is required to work as a polygraph examiner (a professional who applies lie-detector tests), and it is not at all obvious why. Generally, an occupation is licensed if it is obviously in the public’s interest to prevent potential bad actors from practicing. So, for example, it is argued that doctors must be licensed because, otherwise, some idiot might open a hospital in his garage and really hurt someone. And it is argued that accountants must be licensed because, otherwise, some college-dropout might offer to do accounting for an unsuspecting mom-and-pop shop, tell them their numbers look great (when, in fact, they don’t), and cause them to go bankrupt. In short, occupational licensing is supposed to either (1) prevent real, tangible harm, or (2) assure customers that their service-provider is trustworthy. However, interestingly, licensing polygraph examiners does not accomplish either of those goals because polygraph e...