A welcome summer surprise from Team Obama (via the FT):
From auctioneers and barbers to scrap metal recyclers and travel guides, the number of jobs requiring a licence has been expanding rapidly across US states. Now the White House is warning that the occupational licensing requirements imposed by individual states are getting so burdensome that they are holding back the overall US economy, by lifting costs to consumers and erecting barriers to workforce mobility. In a report, the administration called on states to scrap unnecessary regulatory requirements and to harmonise more requirements across state lines, as it rolled out suggestions for better practice in the area. The White House Council of Economic Advisers, Treasury and Department of Labor report cited estimates suggesting licensing restrictions cost millions of jobs nationwide and have boosted consumer costs by more than $100bn. America’s obsession with occupational licences sits awkwardly with the country’s reputation for free market capitalism, but a quarter of US workers require a licence to do their jobs.
This is an issue many center-right reformers, including myself, have been highlighting for some time. More than once I have pointed to an Institute of Justice analysis of 100 low- and moderate-income occupations that found 66 jobs with greater average licensure burdens than EMTs, including interior designers, barbers, cosmetologists, and manicurists. The White House suggests several reforms including a simpler application process, easing exclusions for workers with criminal records, “sunrise and sunset” cost-benefit reviews, and public membership on licensing boards, but this, I think, is especially important.
Allow Licensed Professionals to Provide Services to the Full Extent of their Current Competency. When licensing is deemed appropriate for a given occupation, policymakers must also determine the boundaries of the licensed activity, or “scope of practice.” Typically, this becomes an important issue when multiple licensed occupations provide complementary or overlapping services. For instance, physicians and nurse practitioners may both prescribe medicines in some States. According to the Pew Health Professions Committee report in 1995, policymakers should endeavor to allow practitioners to offer services to the full extent of their competency and knowledge, even if this means that multiple professions are licensed to offer overlapping services.
Research suggests that restricting what nurses do raises health care costs but doesn’t improve quality. Allowing nurse practitioners and physician assistants to do more could be a key way of creating a more efficient and productive US health care system. Innovation guru Clayton Christensen:
Many of the most powerful innovations that disrupted other industries did so by enabling a larger population of less-skilled people to do in a more convenient, less expensive setting things that historically could be performed only by expensive specialists in centralized, inconvenient locations. … Take nurse practitioners and physicians’ assistants. Because of advances in diagnostic and therapeutic technologies, these clinicians can now competently, reliably diagnose and treat simple disorders that would have required the training and judgment of a physician only a few years ago. Accurate new tests, for example, allow physicians’ assistants to diagnose diseases as simple as strep infections and as serious as diabetes. In addition, studies have shown that nurse practitioners typically devote more time to patients during consultations than physicians do and emphasize prevention and health maintenance to a greater degree. But many states have regulations that prevent nurse practitioners from diagnosing diseases or from prescribing treatment that they are fully capable of handling.
Indeed, health care is perhaps the most heavily-licensed sector, and as health care grows so therefore will the share of workers needing approval to work.
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