Don’t we need licensing to protect the health and safety of consumers?
If this were the primary purpose of licensing laws, consumers would be their most vocal proponents. Instead, licensing is almost always initiated by current practitioners of the occupation to be licensed, or their interest group. This suggests that its primary purpose is not consumer safety, but stifling competition by limiting access to who work legally.
Economists have studied this issue. They have failed to find any consistent link between recent occupational licensing laws and improvements in public health and safety.
Don’t licensing laws protect individuals from fraudulent operators or those looking to exploit, abuse or otherwise take advantage of consumers?
Licensing laws may help to a limited extent, but there are more effective and efficient ways to accomplish these goals. These other ways, furthermore, don’t erect barriers around an occupation, as licensing laws do. Laws against fraud and abuse are on the books, for example, and federal and state agencies exist to snuff it out wherever they find it. Open marketplace competition helps, too: Low-quality operators lose business over time. The proliferation of online rating systems like Google reviews, Yelp, Angie’s List and others help expose bad operators and inform consumers about products and service providers.
Doesn’t licensing ensure the quality of services provided in the marketplace?
No. Most licensing laws impose no quality control at all. The state agency that oversees licensing in Michigan does not assess the quality of businesses it issues licenses to. A low-quality provider could just as easily complete the courses, pass the tests and pay the fees as a high-quality provider.
Without occupational licensing, how will consumers distinguish between low- and high-quality providers?
Most people do not ask about the licensing status of the service providers they hire, so, even if licensing leads to better services, it doesn’t necessarily help consumers make better choices. Instead, consumers will continue making informed decisions based on the time-tested informal methods of word-of-mouth, references, reputation, brand recognition, and an ever-growing number of online reviews and ratings.
Would eliminating licensing be unfair to those who went through the process to get a license?
In some ways, yes. But it’s even more unfair to block people from earning an honest living by forcing them to spend time and money jumping through needless hoops, all for the purpose of protecting the already licensed from more competition.