Should You Need a License to Work in Texas?
Should you need a license to work? For a few key fields such as, say, brain surgery, most people would say “yes.” Yet in recent decades, the number of occupations requiring licenses has expanded dramatically.
Since the 1950s, the percentage of Americans working in a field requiring an occupational license has grown from 5 percent to around 30 percent. In Texas, nearly one-third of the state’s workers are employed in a licensed field, and more than 500 occupations currently require some form of professional license from the state.
Each time the legislature meets, it seems more industries come to lawmakers asking to be licensed. Already this year, bills have been filed in Texas to require licenses for such fields as rainwater harvesting, behavioral therapy, and sprinkler-system testing. Traditionally, requests by current practitioners seeking to be licensed have received a friendly welcome at the Capitol. The apparent rationale seems to be that if the people who are going to be regulated want the regulation, it must be necessary.
In reality, the opposite is often true. It’s telling that, while occupational licensing often is justified on grounds of public health and safety, it’s typically not consumer-protection advocates who push for more extensive licensing.
In many cases, occupational licensing is less about protecting public health and safety than it is about forcing potential entrepreneurs to spend months or even years jumping through hoops before they can begin to practice their trade. Of the more than 1,100 occupations licensed in at least one state, fewer than 60 are regulated in all 50 states. The other thousand are licensed in some states but not others, often with no impact on public health and safety. Sprinkler-system testers, for example, are currently only licensed in one state (Wisconsin). Yet there is no evidence that sprinkler systems pose a public menace in the other 49 states.
While licensing may not improve the quality of service, it definitely increases costs. A report by the Institute for Justice found that getting an occupational license in Texas cost an average of $304 in fees and required 326 days of training and two exams.
These requirements reduce the number of people who can practice a given occupation. That can be a boon for incumbent practitioners, who often are grandfathered into the system. But the costs are borne by consumers. A recent White House report found that licensing requirements increased the price of services by between 3 and 16 percent, without any appreciable increase in quality in most cases.
There are encouraging signs that the Texas legislature is waking up to the dangers of over-licensing. In 2015, Texas repealed licensing for hair braiding. This session, Rep. Jason Isaac (R-Dripping Springs) filed H.B. 1684, which would eliminate regulation for speech pathologists and audiologists. H.B. 340 — sponsored by Rep. Craig Goldman (R-Fort Worth) — would repeal licensing for shampoo apprentices.
In addition to individual rollbacks, the state needs to take a more comprehensive look at over-licensing. H.B. 552, introduced by Rep. James White (R-Hillister), would create an affirmative defense against prosecution for practicing an occupation without a license. If an individual charged with violating the licensing requirement can show the requirements burden them substantially, the state would need to show the particular licensing requirements are necessary to safeguard state interests. Forcing licensing agencies to prove the necessity of their rules would ensure that licensing actually serves the public interest and isn’t used just to limit competition.
Other legislation looks to address the conflict of interests that proliferate when a licensing board is made up of incumbent practitioners. State Sen. Don Huffines (R-Dallas) filed S.B. 844, which would require licensing boards to get approval from the state attorney general before adding new requirements to existing licensing systems.
The right to earn an honest living is a fundamental part of the American Dream. If Texas wants to keep alive the entrepreneurial spirit that has made our state great, it needs to reform its occupational licensing requirements.
Josiah Neeley is a senior fellow and Southwest region director for the R Street Institute.