Occupational licensing: Too much of a good thing?

Although licensing can provide benefits to consumers by increasing the quality of services and protecting health and safety, it also imposes significant costs on consumers, workers, and the economy. When electricians, plumbers, and mechanics are required to have licenses, the rationale of protecting public safety seems reasonable. But when florists and upholsterers are required to have licenses, questions may arise about whether the costs outweigh the benefits. The Obama administration recently published a report on occupational licensing that reviewed both the advantages and disadvantages of licensing, with particular attention to best practices by which states can safeguard the well-being of consumers while also reducing the barriers to entering a wide variety of occupations.

On Monday, November 2, the Center on Children and Families at Brookings hosted an event to discuss the state of occupational licensing, featuring a keynote address by Chairman of the Council of Economic Advisers Jason Furman.  Following his presentation of the administration’s findings, two respondents discussed whether licensing restricts the entry of low-income workers to occupations that would improve their income and working conditions.