How requiring too much training hurts workers and consumers alike
It’s great to be a highly qualified professional. But critics say excessive licensing demands have a cost for everyone else
W hen people need something done that they can’t do themselves—a haircut, an oil change, an eye exam—their instinct is usually to seek out the most highly qualified professional possible. Imagine for a second that you are being forced into bankruptcy, for instance. Or that your house is being foreclosed on, or that you are trying to collect child support payments from an uncooperative former spouse.
What you need in those situations is a lawyer, right? Ideally a really good one, who has earned a law degree from some prestigious institution and passed the bar exam with flying colors.
Don’t be so sure. Though an expensively trained lawyer certified in your state is the only kind of person legally allowed to help you, many ordinary legal problems could actually be resolved by a more affordable professional with narrower experience filling out forms, interpreting formal documents, and identifying legal options. “We could be providing good service to a much wider share of the population,” said Gillian Hadfield, a professor of law and of economics at the University of Southern California. Under the current system, she added, around 85 to 90 percent of Americans who need legal help can’t afford it.
In a 2012 speech delivered before the New York judiciary, Hadfield argued for an alternative: We should “allow people and organizations other than lawyers and law firms to provide some forms of legal assistance.” Forbidding anyone without a juris doctor degree from providing legal services may guarantee work for lawyers, after all, but it keeps perfectly capable professionals out of the market while putting legal representation beyond many people’s financial reach. What Hadfield was saying, in effect, was that we would all be better off if we just thoughtfully lowered our standards.
In a world where doctors proudly hang their diplomas on the wall, lower standards hardly sound like a desirable goal. No one wants to return to the days when barbers doubled as surgeons. But across occupational fields in America, a significant movement is being built on the notion that a deliberate lowering of standards—what advocates refer to as “right-sizing” licensure regulation—can actually be good for society. Proponents are calling for changes to the way industries of all kinds—from medicine to cosmetology, from dentistry to funeral administration—go about credentialing their workers. Each situation is different, but the problem critics diagnose is the same: Overly strict occupational requirements make it needlessly hard for people to turn their skills into careers, and make many services unnecessarily expensive.
High standards sound good, of course, and often they are: They guarantee that a service is coming from someone fully trained and bonded, with their professional credentials on the line. But they can also become an obstacle, a costly distortion in the market for skills. It’s a point that has attracted support both from critics on the libertarian right and the progressive left. Our society has become counterproductively picky about who is allowed to do what job, they say, and it’s time to take a close look at how we decide when someone is ready to serve.
In order to become a barber in Massachusetts, you have to put in 1,000 hours of study at a barber school, followed by a year and a half as an apprentice. In order to be an interior designer in Florida, you have to get a minimum of six years of education and experience. In Oklahoma, people who want to sell caskets need to earn a degree in mortuary science and have a year of apprenticeship in funeral services, then take a state-mandated exam.
These kinds of licensing schemes strike Lisa Knepper and her colleagues at the Institute for Justice, a nonprofit libertarian public interest law firm headquartered in Virginia, as serious overkill—as well as a form of self-dealing, since the requirements are determined, in most cases, by industry insiders with a vested interest in keeping newcomers out of their ranks. “Licensing is far too often put in place to protect some people from competition instead of to protect the public,” Knepper said. “The problem is that licensed professions are well organized...and they’re able to exert pressure on legislatures to adopt new licensing regimes or keep existing ones in place. Against that sophisticated advocacy, consumers are really no match.” Nor are the people who hope to enter the profession.
That power differential is part of the reason that, over the past 50 years, there’s been such a steady trend in the United States toward demanding occupational licensing. Morris Kleiner, a professor at the University of Minnesota Humphrey School of Public Affairs who studies labor, crunched the numbers and found that the number of Americans in licensed occupations has increased from 5 percent of the workforce in 1950 to almost 30 percent in 2008. This has had real effects on the labor market, Kleiner has shown. In a paper coauthored with Princeton University economist Alan Krueger, who served in the Obama administration, he reported that licensing requirements led to an increase of roughly 15 percent in wages.
That may be good for those who make it into these guilds, but it creates a burden for many others—including those of us paying for their services. The Institute for Justice, which has been battling excessive occupational licensing since the organization was founded in 1991, recently published a report focusing on about 100 low-income jobs that require some kind of official certification. Its objective was to show that the standards created by industry incumbents are not just making various services more expensive for consumers, but also holding back entrepreneurs and workers who can’t easily afford the required training. The report represents an effort to strike a conceptual blow against the very idea of excessive licensing, an issue that tends to get discussed in a fragmented, industry-specific way. “We are, in some sense, trying to unite people across occupations,” Knepper said.
That may sound more like something you’d expect to hear from a lefty labor activist than a probusiness libertarian. But one of the most striking traits of the licensing debate is that it doesn’t break down along ideological lines. One important branch of licensing reform, within medicine, has gained momentum thanks to support from politicians on both sides of the aisle. Over the past two decades, 19 states have passed laws allowing nurse practitioners to operate with relative autonomy—that is, without the oversight of a full-on doctor—and to provide services that include diagnosing conditions and prescribing drugs. According to Taynin Kopanos, a vice president for state governmental affairs at the American Association of Nurse Practitioners, laws giving “full practice authority” to people who have earned advanced nursing degrees and passed a national exam are under consideration in about a dozen states, including Massachusetts.
“If you allow more nurse practitioners to do relatively low-level examinations and procedures, like administering throat swabs, for example, or giving inoculations, that can help in terms of cost-saving and providing greater access, particularly in low-income communities or rural areas,” Kleiner said. A similar argument is made about physician assistants, a growing category of medical workers who, after just two or three years of postgraduate training, are able to provide a range of medical services, as long as it’s under the supervision of a physician.
The push to create these new kinds of professionals is also driven by the desire to create more access for consumers. In the legal arena, according to Gillian Hadfield, the USC professor, there are states where as many as “98 percent of people facing eviction or debt collection show up in court without a lawyer—without any legal help. That’s stunning. And it’s indefensible.” As Hadfield sees it, those people would be much better off if they were allowed to hire someone to help them with their problem, even if that someone were not quite a lawyer.
“Sometimes people say, ‘How can your solu tion to the lack of access be to provide crappy untrained people to the poor?’” Hadfield said. However, she said, “this is not about providing the poor with crappy untrained people....We can clearly train people to do specific things and do them really well at significant volume at much lower cost.”
She added: “There is no way the economics works out to provide the kind of legal work that we now provide to those who can afford it...to any significant share of the population. It’s just too expensive.”
Later this year, a class of around 14 will graduate from a new program in the state of Washington, where the bar is experimenting with “limited legal licenses” that give people with just one year of training—provided by professors from local law schools—clearance to work in family law. That means people going through more or less routine legal processes like divorce and child custody negotiations will be able to hire specialists for relatively little money, and benefit from their expertise in court.
“Those are things that frustrate our courts because people come in who can’t afford lawyers, so they try to do it themselves, and oftentimes they come to court with the wrong forms or they’re not properly prepared,” said Steve Crossland, who chairs the Washington program and has been working toward the ongoing pilot program for more than two decades. While Washington prepares to expand the experiment beyond family law—they haven’t decided which practice area they’ll tackle next—other states have been kicking the tires on similar initiatives. “California probably has expressed the most interest, though I have to say over the last 18 months, we’ve had interest from a lot of states,” Crossland said. “I’ve been spending a lot of time on the road speaking to various jurisdictions talking about what we’re doing, why we’re doing it. A lot of people are looking at us and thinking, ‘Let’s see how this works.’”
Last October, the Supreme Court heard a case concerning the rights of North Carolina entrepreneurs to offer teeth-whitening services without a dentist’s license. The case pits the North Carolina State Board of Dental Examiners against the Federal Trade Commission, which claims that the board—the body that determines licensing rules—violates antitrust law. A majority of the board’s members are professional dentists, the FTC argues, who have a financial interest in limiting competition.
While the case has not yet been decided, it has attracted a wide range of amicus briefs to the courts from parties who don’t care one lick about teeth-whitening, but who clearly see the case as having licensing implications across the labor market. A group of experts, writing on behalf of the online legal services provider LegalZoom, submitted a brief in support of the FTC, arguing that state licensing boards use their power as a means of suppressing competition rather than advancing the public good. So did a group of professional organizations representing nurses and nurse practitioners. On the other side, briefs were submitted by the California Optometric Association and a group involved in the licensing of engineers, the National Council of Examiners for Engineering and Surveying.
In an interview, the CEO of the latter organization, Jerry Carter, said he was concerned about the outcome of the teeth-whitening case because it challenged a central tenet of how licensing works in America. There is a reason to let industry insiders set the rules on who can do a job, Carter said; unlike the federal regulators at the FTC, those insiders actually know what the job entails, and are well positioned to say what skills are necessary to do it safely. Engineers who have received a state license, Carter said, “have demonstrated that they are minimally competent in their field and have been judged that in practicing their profession they will not do harm to the public.”
Advocates of licensing reform don’t dispute that licensing can serve an important public function. But when they look out at all the industries in which new restrictions have been introduced over the years, they see a potentially valuable idea that’s been taken too far. “It’s an important issue for jobs and for the economy,” said Knepper. “It’s about the freedom to work, and it’s also something that clearly affects folks on the lower end of the economic spectrum.”
Actually rolling back licensing requirements has thus far been difficult. But the people filling a host of new jobs with more targeted training represent a new kind of lobby, and a new group of workers finding a wide clientele. In that light, the lowering of standards may end up being not a sign of compromised quality but, over time, a source of plenty.
Leon Neyfakh is the former staff writer for Ideas. He can be reached at email@example.com.