Today, someone who wants to start a business or enter a profession may find that before they are legally allowed to do so, they must obtain a license from the government. A worker has to pass certain requirements – schooling, testing, paying fees – and in return gets an occupational license or government’s permission to work in a given field.
Occupational licenses used to be required in only a few industries, but the number of jobs requiring government permission to operate has ballooned in recent years, from 10 percent of the workforce needing a license in 1970 to nearly 30 percent in 2008.
While occupational licenses are justified as necessary to protect consumers’ health and safety, today, governments commonly require licenses for jobs that don’t seem to need them, including blow-drying hair and interior design.
Often, the real purpose of the licensing regime is to protect existing businesses by stifling competition. This artificially raises the cost of products and services in license-protected industries.
The result is complexity for job-seekers, bureaucratic and legal barriers for innovators and entrepreneurs, higher prices and fewer options for consumers, less innovation, fewer opportunities for workers and lower economic growth overall. Some women-dominated industries have particularly ridiculous licensing requirements that harm women’s prospects. Policymakers at all levels of government should seek to eliminate unnecessary licensing regimes.