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Hidden costs of
licensing cost more than Christmas
By Eric Boehm / December 25, 2015 / News
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Americans
have a well-earned reputation for generosity and consumerism – two
things that combine to make this weekend the culmination of the biggest
shopping holiday of the year.
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 The average American family will spend more than $880 on Christmas gifts this
year, according to a survey from the American Research Group, which polls
consumers annually to track holiday spending habits. If you’ve been to a mall
within the last week, you might wonder if that number is low-balling things.
But even the tremendous outpouring of consumer cash during the holiday season
cannot match how much Americans spend each year – often without noticing it – as
a result of occupational licensing schemes.
New research from the Heritage Foundation, a Washington, D.C., think tank,
suggests the average household pays more than $1,000 every year in costs
associated with licensing. Unlike holiday shopping, which is “seen” and easily
budgeted for, these costs are hidden inside tax deductions, utility bills and
almost every purchase made.
Licensing is nominally intended to protect public health and safety – something
we should all be willing to pay for, at least on some level – but often goes far
beyond those goals, says Salim Furth, a researcher for the Heritage Foundation.
“In a few cases — mostly in medical professions — there is clear argument for
preventing newcomers from practicing without going through a rigorous
pre-examination,” he said. “However, for most other professions — from barbers
to sign language interpreters to school teachers — that argument does not
apply.”
In Iowa, for example, hairbraiders are required to complete 2,100 hours of
training in all forms of cosmetology before they can be licensed by the state.
Not only does that drive up the cost of services, it keeps some people from
being able to earn a living.
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 In Texas, a similar licensing scheme that
applied to eyebrow threading was recently struck down by the state
Supreme Court.
One in four jobs in the United States is subject to occupational
licensing, which means businesses must get permission from the local
or state government before setting up shop.
Source: White House Report on Occupational Licensing, July 2015
Even the federal government says this is too much government.
In a report released in July, the White House advised state and
local officials to take a hard look at red tape that restricts
employment or increases barriers for entrepreneurs and job-seekers.
Licensing rules create “substantial costs” and are often not in sync
with the skills needed for the job, the report found. They also make
it harder for workers to transport skills across state lines –
moving to a new state often requires going through a brand new
licensing process – and raise the price of goods and services.
“Too often, policymakers do not carefully weigh these costs and
benefits when making decisions about whether or how to regulate a
profession through licensing,” the White House concluded.
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