The pandemic and its aftermath have disrupted America's businesses and stressed its labor market. Patterns of work have shifted, and people have dropped out of the labor market even as vacancies have surged. This 'structural labor shortage' is holding the economy back, suppressing living standards and making it harder to get inflation under control.The problem has many causes, but it sure doesn't help that, in some states, if you want to change jobs and work as a carpenter — or bartender, manicurist, auctioneer, sports coach, tour guide or interior designer, to name just a few — you need a professional license.
In Louisiana, you need a license to be a florist.The damage done by onerous and sometimes ridiculous requirements for occupational licenses has long been recognized. The Obama administration published a report on the subject in 2015, explaining how needless requirements make it harder for workers to change jobs or move to a different state, and called on states to change their rules. There's been some progress, but it's happening too slowly.Of course, regulation is needed where lack of formal qualifications poses a risk to customers or the public at large.
Few would argue that doctors or pilots, for instance, should just be allowed to get on with it. But it's strange that rules affecting millions of ordinary workers, roughly one in five across the country, vary so widely from state to state. A recently updated survey by the Institute for Justice shows that restrictions are strict in some states, mild in some, and nonexistent in others.
Injuries due to reckless flower arrangements seem to be acceptably low just about everywhere.Safety aside, consumers typically don't get better services from more strictly licensed workers. Often, market forces provide. If customers want reassurance about workers' skills, they talk to friends and neighbors or read online reviews.
In some occupations, workers might choose voluntary certification. In most such cases, there's no need for a mandate.The Cato Institute notes that Georgia imposed licensing requirements on lactation consultants, who often choose to get certified, even after an official review recommended against it. The new law required two years of college courses and more than 300 hours of supervised clinical work.
Other examples of occupations facing new and higher barriers despite state reviews advising otherwise: hearing-aid dispensers in Colorado, HVAC technicians in West Virginia, tattoo artists in Minnesota, and timekeepers in mixed martial arts in Hawaii.Ideally, these nonsensical arrangements would simply be scrapped. But the insiders who're already licensed — and the unions and trade associations representing them – want to keep newcomers out, in the hopes of artificially boosting prices and wages. Too often, legislators do their bidding.
For the same reason, presumably, the Biden administration has softened Obama's pro-reform message, even as the post-pandemic economy has made change all the more urgent.When bogus requirements can't be eased or dropped altogether, the damage can be curbed in other ways. Some states have formed compacts that recognize each other's licenses for certain jobs, making state-to-state mobility much easier. One such arrangement recognizes nurses' credentials across 39 jurisdictions.
Arizona Governor Doug Ducey led an effort to introduce so-called universal licensing — if you're qualified elsewhere, you get expedited approval. Other states have begun to do the same. ('If you're qualified elsewhere, you're qualified here' would be even better.)A fractured labor market isn't just bad for the economy in some abstract sense.
It keeps people who want to work unemployed, denies opportunity, and renders what should be valuable skills and experience worthless. It's cruel and pointless — and a scandal that's been tolerated far too long.More From Bloomberg Opinion:• Market Is Ready to Move On. Fed Clearly Isn't: Jonathan Levin• A Soft Landing for the Economy May Still Be Possible: Editorial• Investors Would Be Better Off Believing the Fed: Bill DudleyThe Editors are members of the Bloomberg Opinion editorial board.More stories like this are available on bloomberg.com/opinion