A Brief History of Occupational Licensing

Report Government Regulation

A Brief History of Occupational Licensing

May 23, 2017 13 min read Download Report
Paul Larkin
Senior Legal Research Fellow
Paul J. Larkin Jr. directs The Heritage Foundation’s project to counter abuse of the criminal law, particularly at the federal level.

Summary

The arc of history has tended toward the licensing of an ever-larger number of professions. Today, a number of them—such as barbers, bartenders, and florists—are subject to licensing requirements even though the regulated activities do not bear even a remote relation to protection of the life, health, and safety of community members. Licensing individuals before allowing them to claim that they are “able to heal, cure or relieve those suffering from any injury, deformity or disease” makes sense, but today’s licensing regimes prohibit individuals, sometimes on pain of criminal liability, from engaging in conduct that poses no risk of harm to any person or to the community. Such a regime causes injury rather than protecting against it.

Key Takeaways

Sixty years ago, America’s economy rested on manufactured goods, and only 4 percent–5 percent of occupations were subject to a licensing requirement.

The percentage of the domestic workforce subject to licensing requirements in today’s service-oriented economy is no less than 25 percent of the economy.

Occupational licensing is now one of the nation’s principal forms of economic regulation.

 

Early Versions of Occupational Licensing

Western nations have never operated as examples of pure laissez-faire capitalism.[REF] Consider the English common law. It made three practices offenses against public trade: Forestalling (acquiring goods en route to the market); regrating (buying large quantities of a good at market and reselling them at a higher price in the same market); and engrossing (purchasing large quantities of foodstuffs for resale).[REF] The Crown granted monopolies to particular, favored parties—the colony at Virginia was founded by just such a monopoly—and reserved land and mineral rights for itself.[REF] England also had price controls, usury laws, and sumptuary laws (provisions forbidding certain types of immoral conduct, such as excessive spending, gambling, and prostitution).[REF] Accordingly, the 17th and 18th century economies in England and on the Continent could not be described as laissez-faire.

Colonial and early state governments in America also regulated property and the market.[REF] “Regulation of business was primitive by modern standards,” but “in some ways, it was fairly pervasive.”[REF] Maryland, Virginia, and New York, for example, not only imposed quality controls and inspection requirements over staples, such as tobacco, to maintain their reputation for quality and to increase the price,[REF] but also adopted laws regulating the sale of such items as butter, fish, lumber, nails, shoes, and tobacco. They also imposed price or fee schedules as well as occupational license requirements.[REF]

Licensing regimes have an ancient lineage.[REF] Medieval guilds limited entry into various occupations, while the 13th and 14th centuries saw elementary forms of medical licensing in Germany, Naples, Sicily, and Spain.[REF] The American Colonies subjected bakers, ferry services, innkeepers, lawyers, leather merchants, and peddlers to early forms of regulation.[REF] In 19th century America, states and localities licensed barbers, embalmers, ferry operators, horseshoers, boarding house operators, insurance agents, midwives, pawnbrokers, physicians, real estate brokers, steamboat operators, taverns, undertakers, veterinarians, and anyone who did business with the Indian tribes.[REF] The medical profession and allied fields were particular subjects for licensing. By the last quarter of the 19th century, more than half of the states required licenses to practice as a physician, dentist, or pharmacist.[REF]

The U.S. Supreme Court Upholds the Constitutionality of Physician Licensing

During that period, the Supreme Court of the United States upheld the constitutionality of state occupational licensing regulation in the medical profession. In Dent v. West Virginia, the Court considered a state law requirement that to practice medicine, a physician must graduate from a reputable medical school and pass a qualifying examination or prove that he had practiced medicine in the state for 10 years.[REF] The Court acknowledged that, because every individual has a right to pursue a lawful occupation, the legislature cannot arbitrarily deprive someone of that opportunity.[REF] Nevertheless, the Court concluded that a state may adopt a physician licensing scheme as a way to protect the public health and safety.[REF] Following its decision in Dent, the Supreme Court consistently upheld other types of state health care licensing programs,[REF] as well as licensing requirements imposed on a variety of other occupations as part of the state’s police power.[REF]

The 20th Century Explosion in Occupational Licensing

Since then, there has been an explosion in the number of occupations subject to a licensing requirement.[REF] Sixty years ago, the American economy rested on manufactured goods, and only 4 percent–5 percent of occupations were subject to a licensing requirement.[REF] Today’s economy, by contrast, is service-oriented, and the number of licensed positions has skyrocketed. Since 1950, the percentage of the domestic workforce in positions subject to a licensing requirement has multiplied 500 percent and now stands at no less than 25 percent of the economy.[REF] Two-thirds of that expansion stems from an increase in the number of occupations subject to a licensing requirement.

Occupational licensing is now one of the nation’s principal forms of economic regulation. Among the occupations subject to a licensing requirement are the following:

  • Animal breeders,
  • Auctioneers,
  • Ballroom dance instructors,
  • Barbers,
  • Bartenders,
  • Cat groomers,
  • Cosmetologists,
  • Elevator operators,
  • Florists,
  • Fortune tellers,
  • Hair braiders,
  • Home entertainment installers,
  • Interior designers,
  • Makeup artists,
  • Manicurists and pedicurists,
  • Motion picture projectionists,
  • Plumbers,
  • Sheep dealers,
  • Taxi drivers,
  • Tour or travel guides,
  • Upholsterers, and
  • Whitewater rafting guides.

As one critic has observed, “About the only people who are unlicensed in California are clergymen and university professors, apparently because no one takes them seriously.”[REF]

Conclusion

The arc of history has tended toward the licensing of an ever-larger number of professions. Today, a number of professions—such as barbers, bartenders, and florists—are subject to licensing requirements even though the regulated activities do not bear even a remote relation to protection of the life, health, and safety of community members. After all, “[t]he difference between a bad haircut and a good one is two days.”[REF]

To be sure, it makes sense to license individuals before they are allowed to claim that they are “able to heal, cure or relieve those suffering from any injury, deformity or disease.”[REF] Today’s licensing regimes, however, prohibit individuals, sometimes on pain of criminal liability, from engaging in conduct that poses no risk of harm to any person or to the community. Such a regime causes injury rather than protecting against it.

Mae West was wrong. Too much of a good thing is not always wonderful.

Paul J. Larkin, Jr., is Senior Legal Research fellow in the Edwin Meese III Center for Legal and Judicial Studies, of the Institute for Constitutional Government, at The Heritage Foundation.

 

Authors

Paul Larkin
Paul Larkin

Senior Legal Research Fellow