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 No, not care in which licensing regimes are repealed or how quickly we are rid of them.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

Licensing Boards Might Violate Federal Law: Regardless, They Are Terrible Policy

Competition is as American as baseball and apple pie. “May the best man win” is a sentiment so old it doesn’t care about your pronouns. The beneficial effects of competition on economic markets are well documented. So why do we let powerful business interests change the rules of the game when they tire of competing in the free market? Most of the time when an occupational license is enacted, it is the members of the regulated industry who push hardest in favor of the license. Honest competition may be fundamentally American, but thwarting that competition through licensing seems to be fundamentally Oklahoman. Oklahoma doesn’t have the most occupational licenses, but when they do license an occupation, the requirements tend to be more onerous than the same license in other states. But what if, instead of merely breaking the rules of fair play to keep out would-be competition, Oklahoma licensing boards are also breaking the law? Normally a concerted effort to lock out competition would v...

School Teachers Begging for Basics

What if a hospital’s administrators regularly told surgeons to make do without bandages, with dull scalpels, and little to no anesthetic while claiming tight finances? With all the money hospitals have , there would be questions about the administrators’ competence and possibly audits to look for malfeasance. Something like this needs to happen at Oklahoma City Public Schools. My wife is a teacher working in the Oklahoma City Public Schools (OKCPS) system. Last year, she came home telling me how there was no paper available for the notoriously few and regularly broken, undersupplied duplicating machines at her school. What’s more, there was no plan for the district to provide any. In the past, she was told, a parent had donated paper to that particular campus, but that parent had transferred his child to a private school. The school had surplus paper from previous years, but that was gone. There were no plans for the district to provide more. Now, I am well aware that educatio...