Do Pet Sitters Really Need A License? How Occupational Licenses Are Hurting The Economy

In New York City, you need a license to pet-sit someone’s dog (at least if you want to be paid). In Louisiana, you need a license to become a florist. Nine states require funeral attendants to be licensed before starting work. 

The number of jobs–from cosmetology to interior design–requiring government-issued licenses is on the increase. About 29% now require one, up from less than 5% in the 1950s, according to economists Morris Kleiner and Alan Krueger. In that time, the share of licensed workers in the U.S. workplace has jumped fivefold. And the requirements on many occupations–including training and education, tests, fees and even character assessments–are also on the rise, say critics of the regulations.

License regimes emerge when states, cities, counties, or the federal government regulate an activity, often in the interest of public safety. New York’s pet-sitting law, which requires licensees to buy insurance and use designated kennels, is meant to “ensure [the] health and safety of pets and reduce risks to public health,” the city’s Health Department says (though it very rarely enforces the regulation).

It’s tempting to see positive news in this licensing trend–that workers are becoming professionalized (that is, competent and trustworthy) and that consumers are being protected from fly-by-night operators. But, rather than protecting the public or raising standards, critics see workers being frozen out of potential jobs, and incumbents (whether companies or individuals) protecting profits and wages.

“Licensing creates a fence that people trying to get into that occupation have to climb over, while, at the same time, protecting people within the fence who are already practicing the occupation, who would have to compete against them,”says Jason Wiens, policy director at the Kauffman Foundation, an entrepreneurship-focused think tank. “It’s an anti-competitive practice that has negative barriers to entrepreneurship.”

Onerous occupational licensing has traditionally been a bugbear of the libertarian right, which wants government out of the way of the market. But recently the issue has been taken up by more liberal economists as well, including Kreuger, a professor at Princeton. In an extensive report on the topic, the Obama White House, where Kreuger was chief economist, argued that licensing requirements raised the cost of goods and services, restricted employment, and made it more difficult for workers to cross state lines.

“Some economists say more licensing has contributed to less mobile labor markets, because people don’t move between jobs as much, as well as to declining economic dynamism in the United States, particularly in the rate of new business creation,” Wiens says.

Read more of this Fast Company article by Ben Schiller by clicking here.

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