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 No, not care in which licensing regimes are repealed or how quickly we are rid of them.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

Can Government Force You to Close Your Business?

1889 Institute takes no position on whether any or all of these measures are warranted or necessary, or whether their economic fallout would inflict more human suffering than they prevent. We are simply evaluating whether they are legal.   With the unprecedented (in the last 100 years at least) reaction surrounding the outbreak of Covid-19, questions that few living legal scholars have considered are suddenly relevant.   Can a quarantine be ordered?   Can a mass quarantine, lockdown, or “cordon sanitaire” be ordered? Can businesses be ordered to change their behavior?   Can businesses be ordered to close? Can state governments order these measures? Can local governments order these measures? My legal brief addresses these issues from a statutory point of view; it is clear that state law gives the governor and mayors broad authority in a state of emergency. They must, of course, do so in a neutral way that they reasonably believe will help preve...

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. ...

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...

Lack of Action from Oklahoma’s Occupational Licensing Advisory Commission

Apparently, if you’re a legislator in Oklahoma and want to look like you’re doing something about an issue while not actually doing anything at all, you pass a bill to create a commission to study the issue. At least, that’s how the Oklahoma Occupational Licensing Advisory Commission (LAC) has operated so far. According to a study I did while at the Goldwater Institute, Oklahoma ranked as the 24 th most-licensed state. A study by the Institute for Justice ranked Oklahoma 35 th in how broadly and onerous its licensing laws are. But these, and similar studies, are really just counts of how many occupations states license, so they leave out a lot of nuance. The Institute for Justice’s report does add some nuance, reporting that by its standard of measure, Oklahoma ranks 18 th in how burdensome are its licensing laws. That is an important piece of information. On the one hand, according to the Institute for Justice, Oklahoma’s licensing laws cover fewer occupations than in ma...