Note: This blog originally appeared on another site in 2008, where it has since been taken down.
In a book that I’m presently working on (Your $100,000 Career Plan: Match Your Personality to a Six-Figure Job), I classify a group of occupations under the heading “professional,” and one common characteristic I note among them (they include architects, lawyers, physicians, dentists, and veterinarians, among others) is that they are all licensed. However, it seems that licensure is not as exclusive an occupational characteristic as it once was. One recent study, “The Prevalence and Effects of Occupationhttp://www.blogger.com/img/blank.gifal Licensing,” estimates that 29 percent of the national workforce is licensed by some level of government.
It’s important to remember what a license is and is not. Some occupations, such as pet groomer, are open to anyone who wants to offer his or her services. (The results of this free market are evident in the unpredictable appearance of my neighbor’s West Highland White Terrier.) Registration is a requirement that some jurisdictions impose on workers in some other occupations. For example, to keep bees in Rhode Island, you must register with the state. This requirement probably is in place so that the state’s Department of Environmental Management knows where the beehives are and thus is able to conduct inspections for communicable diseases. Certification is usually awarded by a professional organization as recognition that the practitioner has met certain standards, such as a specified level or kind of education, a specified amount of work experience, or a passing score on a test of occupational skills, knowledge, and perhaps professional ethics. By definition, certification usually is not a legal requirement, but in many occupations it is a sign of professionalism. Licensure usually imposes entry requirements similar to those of certification, but it differs in that it is required by law.
So what is the benefit of licensure that has caused it to become so widespread? Occupational licensure began as a way to ensure the competence of workers who make life-and-death decisions—for example, doctors. For many years, it has been extended to other occupations that might have great impact on people’s lives and well-being, such as structural engineers and lawyers. But the function of licensure has slowly changed, largely because of the nature of the people who control it. Licensure is enforced by government, but inevitably the people who set the standards of professionalism, who specify the contents of the licensing exam, and who determine the wording of the code of ethics are the practitioners. And, for the most part, these are the same people who have encouraged licensure in fields where previously it did not exist. In most fields, practitioners have a vested interest in minimizing competition, so licensure benefits them—but not necessarily the public—by creating a barrier to occupational entry. Kleiner and Krueger found that licensure provides a pay boost roughly equivalent of that of union membership: about 15 percent.
I’m not a market fundamentalist, and recent events in the financial sector have underscored the important role government needs to play in the economy. I wouldn’t want to be operated on by a doctor who lacked a physician’s license. However, I’m not sure that the expansion of licensure is always a good thing.