The Federal Trade Commission (FTC) has created a new task force dedicated to reforming government hurdles to job growth, including occupational licensing.
Acting Chairman Maureen Ohlhausen announced in March the launch of the Economic Liberty Task Force’s website, focusing on promoting free-market competition as an alternative to state and local occupational licensing regulations.
Before officially unveiling the initiative, Ohlhausen gave a speech at George Mason University in February saying she “challenge[d] anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”
Longtime Reform Proponent
Ed Timmons, an associate professor of economics at Saint Francis University, says FTC has been a part of the fight for commonsense occupational license reforms for decades.
“The FTC has been a good advocate on this front for a while,” Timmons said. “Going all the way back to the 1980s, they did research on licensing in the eye care professions. There were actually some laws for eye care professionals that banned advertising, and clearly that was an anticompetitive practice on the part of the eye care professionals. The FTC did quite a bit of work documenting how it raised prices on eye care services and eyewear. Ultimately those restrictions were removed.”
Growing Consumer Concern
Occupational licensing regulations benefit insiders and cost consumers, and the problem is only getting worse, Timmons says.
“Consider the statistic that in 1950 around 5 percent of workers required licenses for their job, and today estimates range anywhere from 22 to 29 percent,” Timmons said. “We know that it certainly results in higher earnings for those who pay for the license—as much as 15 percent. It seems to be associated with higher prices for services for consumers, and estimate range anywhere from 3 percent to 15 percent for that as well. And we know that in many cases, this presents barriers to entry for a lot of workers that are aspiring to enter a new profession and try and climb the job ladder.”
That’s the Spirit!
Patrice Lee Onwuka, communications director at Generation Opportunity, approves of Ohlhausen’s commitment to pro-consumer reforms.
“I think what’s encouraging about what the FTC acting chairwoman mentioned is just the spirit, that the federal government is trying to lead the way and encouraging states to also follow through on their occupational licensing reforms,” Onwuka said.
Government meddling in the marketplace stymies younger workers starting their careers, impeding economic growth and keeping them from finding work, Onwuka says.
“When we look at youth unemployment, which thankfully is no longer in the double digits but hovered around 12–15 percent throughout the recession and well into the recovery, we still have a lot of young people who are either underemployed or have dropped out of the job market,” Onwuka said.