Prosaic Licenses

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 Occupational Licensing,” estimates that 29 percent of the national workforce is licensed by some level of government.

That figure surprised me. Evidently the percentage is so much higher than I expected partly because past estimates have been based solely on state licensure requirements and partly because the number of licensed occupations has grown in recent years. The researchers who conducted this study in 2006, Morris M. Kleiner of the University of Minnesota and the prolific Alan B. Krueger of Princeton, based their finding on a specially designed Gallup survey asking respondents “Does your job require a license by a federal, state, or local government agency?”

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 occupations. For example, to keep bees in Rhode Island, you must register with the state. Probably this requirement 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. In many foreign countries, "registration" means the same thing as "licensure"; this meaning survives in our term “registered nurses,” who actually are licensed. In some foreign countries where all professional workers are educated at state-run universities, there is no distinction between licensure and certification in these occupations because professional status is awarded by the universities.

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 a great impact on people’s lives and well-being, such as structural engineers and lawyers.

But licensure has slowly spread to include occupations that do not have a profound impact on the public, largely because this is what the practitioners want. Although licensure is enforced by government, inevitably the people who control it--who set the standards of professionalism, who specify the contents of the licensing exam, who determine the wording of the code of ethics, and who lobby to give their licensure requirements the force of law--are the practitioners.

Yes, increased professionalism can benefit the public. But in most fields, practitioners have a vested interest in minimizing competition, so licensure benefits them—and 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.

In Maine, for example, you need a license to dig for marine worms. The state imposed this licensure not because careless worm-digging could endanger anyone’s life, but rather to protect Maine’s worm-diggers from having to share their beaches with out-of-state diggers.

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.