October 2, 2018

Thoughts on FTC Economic Liberty Task Force Report & Occupational Licensing Reform

Adam Thierer

Senior Research Fellow

Over at the Mercatus Center Bridge blog, Trace Mitchell and I just posted an essay entitled, “A Non-Partisan Way to Help Workers and Consumers,” which discusses the new Federal Trade Commission’s (FTC) Economic Liberty Task Force report on occupational licensing.

We applaud the FTC’s calls for greater occupational licensing uniformity and portability, but regret the missed opportunity to address root problem of excessive licensing more generally. But while FTC is right to push for greater occupational licensing uniformity and portability, policymakers need to confront the sheer absurdity of licensing so many jobs that pose zero risk to public health & safety. Licensing has become completely detached from risk realities and actual public needs.

As the FTC notes, excessive licensing limits employment opportunities, worker mobility, and competition while also “resulting in higher prices, reduced quality, and less convenience for consumers.” These are unambiguous facts that are widely accepted by experts of all stripes. Both the Obama and Trump Administrations, for example, have been completely in league on the need for comprehensive  licensing reforms.

Trace and I argue that we need serious occupational reforms built on the idea of the “right to earn a living” that must pass this test: “All occupational regulations shall be limited to those demonstrably necessary and carefully tailored to fulfill legitimate public health, safety, or welfare objectives.”  Also, all licensing authorities should be put on the clock and be required, within one year, to reassess the wisdom of all existing licenses to ensure they meet that test. If not, they are repealed or reformed.

In recent testimony in Texas, our Mercatus Center colleague Matthew Mitchell has also discussed other reform options, including the “Occupational Board Reform Act,” which recently passed in Nebraska. The goal of the law is to “protect the fundamental right of an individual to pursue a lawful occupation;.” They key provision of the Act demands that state actors:

"use the least restrictive regulation which is necessary to protect consumers from undue risk of present, significant, and substantiated harms that clearly threaten or endanger the health, safety, or welfare of the public when competition alone is not sufficient and which is consistent with the public interest;"

That’s an excellent approach to reform and when combined with the Right to Earn a Living Act, policymakers can begin to reverse the protectionist, anti-competitive licensing schemes that encumber entrepreneurs and workers across the land.

In forthcoming work, I hope to more fully develop the connection between the right to earn a living, the need for comprehensive licensing reform, and the freedom to innovate more generally. In the meantime, hop over to The Bridge to read our new essay on how the FTC report helps advance this cause.