Occupational Licensing: The Need to Reform Kentucky
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Dr. Dick Carpenter, Director of Strategic Research for the Institute for Justice
Mr. Lee McGrath, Senior Legislative Counsel & Managing Attorney for the Institute for Justice
The Institute for Justice is the nation’s leading advocate for repealing the biggest type of regulation in the biggest market of them all—the labor market. Occupational licensing laws dictate that 28 percent of all Kentuckians need the governments permission before they can work. That percentage is greater than the 11 percent of Bluegrass residents who are union members and the 3 percent of hourly-paid workers in Kentucky who earn the minimum wage. For years, a myth has prevailed about occupational licensing—consumers, workers, and the general society enjoy greater protection of health and safety as a result of licensing. But the origins of licensing illustrate how from their inception they offer protection primarily for one group—those who are licensed. By excluding competitors, licensed practitioners can command higher prices from consumers. But the costs don’t end there—fewer job opportunities, reduced interstate mobility, and other costs accrue, while the purported social benefits rarely materialize. Fortunately, this is a problem that can be fixed. Through empirically-based analyses and thoughtful application of market and government remedies, benefits to consumers and workers can often be realized without the blunt instrument of licensure and its attendant costs.