When professions utilize occupational licensing to impose unnecessarily burdensome requirements and fees to deny entry to a profession, occupational choice and economic opportunity are drastically limited in the Volunteer State.
By Macy Scheck, Ron Shultis and Daniel J. Smith / The Center Square
Sadly, these costs fall the hardest on the most vulnerable populations.
The evidence shows occupational licensing makes it harder to obtain certain jobs, especially for minority and low-income residents. Education, experience, and financial costs tend to be a greater burden for underserved populations because of a lack of access to quality formal education and financial resources. And, by restricting occupational choice, licensing can serve to deny economic opportunity to minority and low-income residents.
Historically, licensing laws were pursued in some cases with the harmful intent of denying economic opportunity to African Americans. This was certainly true for some licensed professions in Tennessee, such as barbers.
An archival search of newspapers could not locate a single instance of consumer harm from unlicensed barbers before the first major attempts to license the profession in Nashville in 1903. In fact, the Tennessean asked at that time, “Is there sound reason for the enactment of a barbers’ licensing law?”
The purpose, however, was clear to African American barbers who strongly opposed the licensing laws. They saw that the effect of licensing would put them out of business. Barber exams in Chattanooga by the 1940s, for instance, accomplished this through an exam that required prospects to needlessly memorize barber terms in Latin giving a distinct advantage to those with access to financial resources and quality education.
This trend continues today as licensing laws still mau create discriminatory outcomes. For example, a recent study in the Journal of Midwifery & Women’s Health found racism is still “common in midwifery education, professional organizations, and clinical practices.”
Occupational licensing also can harm minority and low-income residents by pricing services beyond their ability to pay. Licensing in a wide range of industries, including barbers, electricians and plumbers, decreases the availability and quality of these services for low-income residents. The increased cost of service forces these residents to choose between going without the service, recklessly performing the service themselves, or to hire someone under the table.
Our new study, The Costs of Occupational Licensing in Tennessee, offers several avenues of reform for policymakers looking to empower our most vulnerable populations.
Policymakers should eliminate any occupational licensing requirements with no credible and documented threat to consumer safety.
Even when plausible harm exists, policymakers should take into consideration whether other mechanisms, such as certification, private litigation, insurance or warranties, could assure consumers of quality without empowering industries to restrict occupational mobility and economic opportunity for the least advantaged.
Tennessee policymakers can best serve our most vulnerable populations by thoroughly reviewing and reforming Tennessee’s licensure laws to reduce the imposed burden on all residents.
• Macy Scheck is a Ph.D. research fellow with the Political Economy Research Institute. Ron Shultis is the director of policy and research at the Beacon Center of Tennessee. Daniel J. Smith is the director of the Political Economy Research Institute at Middle Tennessee State University and professor of economics at the Jones College of Business.