Occupational Licensing’s Rise to Attention

In the United States, the post-1950 expansion of the service economy fueled policies by States to license specialized skill-intensive occupations in rationally uncontested areas such as medicine and law. Subsequent progressive social reforms such as the consumer activist movement of the 60's contributed to a public panglossian view of occupational licensure as a benevolent action enacted to protect them against unscrupulous, incompetent and unsafe providers of professional services. Legislators found little political reason to constrain proposals for licensure particularly when buoyed by the fact that licensing is principally self-funded through licensing fees giving it little if any impediment from budget or appropriation constraints.

Today, the hegemony of formal education’s traditional business model is being challenged.  Macro trends in employment, technological advances and the inability for our legacy educational systems to maintain pace with an unprecedented global demand for learning have fueled a renaissance in educational entrepreneurship and innovation that are sure to change the way we think about education and learning.

Occupational regulation has experienced a remarkable level of expansion over the past several decades and the public protection role of occupational regulation has generally been accepted as the logically justifiable rationale for its creation.

Indeed a large body of economic literature has shown that free markets for professional services may not produce efficient outcomes resulting from market failures of information asymmetries, natural monopolies and externalities that harm the public.

While common ground can be found in a market failure rationale for regulatory intervention, much of the regulatory power at the State level rests with occupational licensing boards, whose members consist of active participants in the profession being regulated. Licensing boards regularly meet to establish and maintain requirements for entry into hundreds of occupations. Scholarly research on the effects of this structure in occupational regulation have concluded that among its unwanted consequences is the creation of industry captured cartels, limiting competition and increasing costs to consumers, without a proportional welfare benefit in terms of quality or safety.