In advance of Monday’s presentation to the John Locke Foundation, Dick Carpenter of the Institute for Justice describes the problems created by “bottleneckers.”
Those on the Left and the Right share a growing awareness that politicians and corporations have “rigged” the system against ordinary Americans. Across the country, industries routinely exploit government power for their own private gain.
In my new book, I describe how “bottleneckers” lobby legislators to create regulations (or defend existing ones) that block potential competitors from entering an industry. With these government-enforced barriers in place, bottleneckers face fewer rivals and don’t have to work as hard to compete.
Such bottlenecks often take the form of occupational licensing. Traditionally, government-mandated licensing was limited to a handful of trades, such as medicine and the law. But over the years, bottleneckers—often through self-serving professional associations—successfully persuaded governments to adopt new licenses that are difficult or practically impossible to obtain. This restricts opportunities for would-be entrepreneurs trying to break into the marketplace and provide new or better services.
These restrictions are great for the bottleneckers, but they are bad for consumers. A report by the Brookings Institution summarized many of the academic findings on occupational licensing. Licensure can boost wages for licensed workers by as much as 15 percent, while increasing the cost for consumers by anywhere from four to 33 percent. As a result, one study even estimates that pervasive licensing leads to “up to 2.85 million fewer jobs nationwide, with an annual cost to consumers of $203 billion.”
Back in the 1950s, about five percent of Americans needed a government-issued license to work. Today, nearly one-third of North Carolina’s workforce is either licensed or certified by the government. By comparison, that figure is well above the number of workers who earn at or below minimum wage or who are represented by a union.
Bottleneckers typically claim the costs of licensing are necessary to protect the public, but the reality is quite different. In North Carolina, barbers, cosmetologists, manicurists and massage therapists all must complete far more training for their licenses than is required for emergency medical technicians—who hold people’s lives in their hands. This is not to say that EMTs should face greater licensure requirements. Rather, the tougher licensing requirements for the other occupations demonstrate greater skill in lobbying—not greater demonstrable need for public protection by the government.
Consider the case of Steve Cooksey, a blogger from Stanley, North Carolina. After he was diagnosed with diabetes, Cooksey adopted the paleo diet, which minimizes grains, sugar and processed foods that weren’t available during the Paleolithic Period. He lost nearly 80 pounds and stabilized his sugar levels. Excited by his success, he started a blog and a Dear Abby-style advice column on the paleo diet.
But no good deed goes unpunished. In 2012, following a complaint by a state-licensed dietician (not a member of the public), the North Carolina Board of Dietetics/Nutrition told Cooksey that by giving his readers advice, he was actually practicing “nutritional counseling” without a license. But Cooksey never claimed to be a medical professional (he had a prominent disclaimer on his blog). Moreover, at no time did the Board—or anyone else—provide evidence of anyone coming to harm as a result of his blog.
No matter: According to the Board, if Cooksey didn’t censor his blog, he could be prosecuted and face 120 days in jail, unless he became licensed, which would require a bachelor’s degree in nutrition and a 900-hour clinical internship.
By chilling Cooksey’s speech, the Board could tighten its bottleneck on dietary advice, thereby preserving and extending the economic advantage of its members. Indeed, as the president of the Academy of Nutrition and Dietetics once wrote, licensing can “protect dietitians by limiting the number of practitioners through restrictions,” which is “economically beneficial for dietitians.”
Represented by the Institute for Justice, Cooksey filed a lawsuit to defend his First Amendment rights. After a federal appellate court issued a ruling favoring Cooksey, the Board revised its guidelines in 2015 to settle the case.
Thankfully, commonsense licensing reform is one of the few issues where both parties agree. During the Obama administration, the White House Council of Economic Advisers urged lawmakers to get rid of “unnecessary” licenses. Last year, as part of its national party platform, the GOP endorsed reducing licensing laws, since they “shut untold millions of potential workers out of entrepreneurial careers.”
All North Carolinians should have the right to earn an honest living free from unnecessary government regulation. Smashing open licensing bottlenecks would expand economic opportunity in the process.