Licensing: Fact vs. Fiction FAQ

"We need occupational licensing to protect individuals from fraudulent operators or those looking to exploit, abuse or otherwise take advantage of consumers."


Truth: There are many more effective and efficient ways to accomplish these goals without occupational licensing. Laws against fraud and abuse are already on the books. Poor quality operators will lose business, and the availability of online rating systems like Yelp and Angie’s List already enable customers to choose wisely.

"Occupational licensing is needed to protect the health and safety of consumers."


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Truth: Licensing is almost always sought by the regulated industry, not by consumers, as a means of stifling competition by limiting access to the profession. Most of the licensed professions have nothing to do with protecting the health and safety of consumers. Economic research has not found any consistent link between occupational licensing laws and improvements in public health and safety.

"Occupational licensing provides the state with a way to elevate the quality of services provided in the marketplace."


Truth: Actually, many licensing laws impose no quality control at all. There is no evidence that occupational licensing has any positive effect on quality, but it does make licensed services more expensive.

"Without occupational licensing, consumers could not confidently distinguish between low- and high-quality providers."


Truth: Information is now so widely and immediately available to customers that individuals are in a better position than ever to make their own informed decisions. While consumers frequently read and provide reviews, they rarely ask to see copies of licenses and rarely complain to licensing authorities. Most complaints filed with licensing authorities come from existing licensees trying to stop competition. See the evidence here.

"Occupational licensing allows oversight within an industry by fellow industry professionals, who are familiar with the practices and have the unique perspectives necessary to determine when regulations or standards need to be adapted."


Truth: This “oversight” creates a conflict of interest when those industry professionals are regulating their own competitors. In fact, the Supreme Court has said that industry insiders need strong public oversight if they are involved in regulation, precisely because it is anticompetitive and thus harmful to consumers.

"Eliminating licensing is unfair to those who went through the process to get licenses."

True, but it’s more unfair to block people from entering a business just for the purpose of protecting those who have already received a license. This demonstrates why licensing is especially harmful to low-income workers. Any unfairness here is the fault of overregulation, not the fault of newcomers and entrepreneurs.

Learn more about licensing here.