Occupational licensing is the most strenuous form of labor market regulation. It requires a person to obtain a government permission slip to work. To obtain this permission slip, individuals must often complete minimum levels of training, pay fees, and complete an exam before being allowed to perform a job or voca- tion. The intended goal of these licenses is to ensure public health, safety, and welfare by mandating quality standards in a profession. However, the reality is that licensing limits or prevents competition among individuals in an industry and artificially inflates licensed workers’ wages at the expense of consumers and potential entrants.
Key Points
- The intent is to protect the public from harm caused by unqualified or untrained service providers.
- Texas’ licensing laws are ranked 21st most burdensome as the state regulates a wide variety of occupations, from high school head coaches to cosmetologists to doctors.
- Licensure results in increased wages and decreased competition for incumbents, stifling innovation and burdening consumers with artificially high costs.
- The Texas Legislature should eliminate those unnecessary barriers to opportunity while considering other options to protect the public’s health, safety, and welfare.