The U.S. Supreme Court may decide the fate of occupational licensing laws, which require government-approved licenses for scores of occupations ranging from hairstylists to geologists, depending on the laws of a particular state.
The number of occupations requiring state licenses has soared in the last 50 years, and so has the criticism against them in free market circles. Now the Supreme Court may weigh in to settle a dispute between an order of Benedictine monks in Louisiana and the Louisiana State Board of Embalmers and Funeral Directors. The Justices are likely to decide by October whether to take the case. A ruling could have a big impact on state licensing laws.
After their casket-making business was shut down because of a state law requiring a funeral director’s license to sell caskets, Benedictine monks at Saint Joseph Abbey in Covington, La., in 2010 sued the state to strike down the law. The monks have won in the U.S. Fifth District Court and the U.S. Fifth Circuit Court of Appeals.
The Louisiana State Board of Embalmers and Funeral Directors in July filed a “cert” petition asking the Supreme Court to review the lower court decisions because there is a split among federal courts regarding occupational licensing laws. The U.S. Fifth and Sixth Circuit Courts have ruled against them, but the U.S. 10th Circuit has upheld them, ruling they represent a legitimate state interest.
“If the court does grant cert, . . . that would be significant, not just for the monks in this case, and not just for the funeral industry, but in a lot of cases,” said Darpana Sheth, an Institute for Justice attorney who is representing the monks.
Economic Barriers
To become licensed funeral directors, the monks would be required to take several courses, pay fees, pass a test, learn about embalming, and outfit their store with embalming equipment, Sheth said.
“It erects this enormous barrier so people can’t just simply sell caskets,” she said. “By requiring this licensing regimen, it keeps out other competition and protects funeral directors from competition.”
Public health and safety issues are often invoked to support licensing laws, but that justification doesn’t make sense, she said, especially in this case, because Louisiana doesn’t require a casket for burial.
“That shows the absurdity of some of these laws. That is obviously not intended to protect anybody. I’m not sure what it is we’re trying to protect when you’re talking about a dead body,” said Byron Schlomach, chief economist at the Goldwater Institute and author of “Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs,” published last year by the Goldwater Institute.
Reverse Robin Hood Effect
Licensing laws like this one make it more difficult for people to enter occupations, Schlomach said. Those who are already well-off can afford the classes and fees required for licensing, but those with lower incomes will have a harder time entering the occupations. In addition, the higher costs of licensed services make them less affordable.
“If you have a modest income and you need a haircut, you’re paying more than you would have to otherwise,” Schlomach said. “It’s a redistribution in the opposite direction than people are used to thinking about it.
“When it comes to barbering and cosmetology, that’s one of the least justifiable licenses that there is, but it’s almost entirely, universally common,” he said. “The fact is, a lot of people could easily have a natural talent for cutting hair, for example, and look in a book and understand real quickly different styles and basically teach themselves how to do it, but if you have a barber school or a cosmetology school, you can’t dare let the licensing law lapse because as soon as it does, there’s no demand for your school, or much less demand.”
No Safety Advantages
Occupational licensing laws amount to economic protection for those who are already licensed, Schlomach said, and they generally don’t add to public safety.
“They always couch the argument in consumer protection—we’re going to pass this law for your own good, and everyone will be safer. They always tell hypothetical stories, occasionally actual stories, of where someone was harmed, but there’s no real evidence, even in these stories, that if someone was licensed the harm would have been prevented,” he said.
“Even with the licensing law, someone can be neglectful. There is no guarantee that because of a licensing law, some manicurist isn’t going to let their tools get soiled and somebody will end up with an infection,” he said.
Every state has some occupational licensing requirements, and at least one state requires licenses for interior design.
“I guess color clashing can kill,” Schlomach said. “I’m not quite sure how that works.”
Morris Kleiner of the University of Minnesota documented the surge in occupational licensing in 2008, when he reported one-quarter of the U.S. workforce was required to obtain a state license, up from just 5 percent in 1950.
The Institute for Justice, which is representing the monks in their lawsuit against Louisiana, last year studied 102 low- to moderate-income occupations that are licensed in at least one state. The Institute reported Louisiana licenses 71 of the 102 occupations, more than any other state, followed by Arizona (64), California (62), and Oregon (59).
