What Could Justify Occupational Licensing Requirements?

• Author: Harrison Frye
• Position: Assistant Professor of Political Science, School of Public and International Affairs, University of Georgia
• Pages: 859-878

What Could Justify Occupational Licensing

Requirements?

HARRISON FRYE*

ABSTRACT

Over the last seventy or so years, occupational licensing requirements, or

legal restrictions on who can work within a particular profession, have bal-

looned. These restrictions on freedom stand in need of justification, particularly

in light of the concern that such restrictions simply amount to illegitimate rent-

seeking. In this paper, I argue that most possible justifications face severe prob-

lems. Ultimately, I argue that the most promising line of defense for occupa-

tional licensing requirements is that some professions may require aiming at a

minimum threshold of quality. The reason for this is that, in the absence of a

floor for quality, there would be unacceptable social effects. This justification, if

successful, is limited in scope, and would not justify many requirements cur-

rently in force.

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860

I. OCCUPATIONAL LICENSING REQUIREMENTS: A PRIMER . . . . . . . . . . 861

II. THE BURDEN OF PROOF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 863

III. CUSTOMER-BASED ARGUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 866

IV. PROFESSION-BASED ARGUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 871

V. THE MOST PROMISING ARGUMENT: SOCIAL BENEFITS . . . . . . . . . . 874

CONCLUSION AND FINAL POINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877

* Assistant Professor of Political Science, School of Public and International Affairs, University of

Georgia. I would like to thank the participants of the November 2020 conference on the Ethics of

Regulation at the Georgetown Institute for the Study of Markets and Ethics for their comments and

questions. John Hasnas and Geoff Sayre-McCord provided additional written comments that I am

grateful for. I would also like to thank Nora Benedict for conversation on these issues as well as the

editors of this journal for their comments. © 2021, Harrison Frye.

859

INTRODUCTION

In season five of the MTV reality show Teen Mom 2, Chelsea Houska (now

DeBoer), one of the eponymous moms, received a notice from the South Dakota

Department of Labor. Houska was in the process of applying to become a li-

censed esthetician. However, through social media posts, it came to the attention

of the South Dakota Cosmetology Commission that Houska may have illegally

provided aesthetic services for pay at her friend’s wedding. As a result, the board

withheld her license. Over the course of the season, Houska repeatedly expresses

worry that, if she is unable to acquire her license, her plans of making enough

money to purchase a house will fall through. It is not obvious that Houska, a

highly visible cast member of a highly successful reality TV show, would suffer

much financial setback if she did not receive her license.

1

According to tabloid reports, Houska (now DeBoer) earned $500,000 from her appearance on the

reality show, “Teen Mom 2.” This does not include whatever money she received outside the show due

to her visibility and social media following. These Are the Highest Paid ’Teen Mom’ Stars in 2020,

Salaries Revealed, MOMMY THINGS, http://mommythings.com/teen-mom-salaries/ [https://perma.cc/

BN25-ZNJD] (last visited Apr. 22, 2021); Rachael Ellenbogen, Cash Clash, U.S. SUN (Nov. 19, 2020),

https://www.the-sun.com/entertainment/1826799/teen-mom-briana-dejesus-jade-cast-salaries-fight-

money/ [https://perma.cc/4T98-2WSA].

However, her plight

within the plot of the show is a real one for many.

The fact that Houska’s financial future as an esthetician was in the hands of a

board of certification is the result of occupational licensing requirements. I will say

more about the details of such requirements in the next section, but, briefly, such

requirements legally limit entry into a given profession to those who acquire rele-

vant certification. Such certifications can be quite costly, as professional aspirants

often must take certain courses or receive certain degrees, acquire relevant experi-

ence, pass tests, and/or pay licensing fees. As the title asks: What could justify such

requirements? After all, they act as a restriction on freedom. If those of us in aca-

demia have no need to submit to such restrictions, why should we expect doctors,

lawyers, estheticians, plumbers, auctioneers, and others to submit to them?

The question in the title is a sincere one, and this paper is an attempt to review

possible justifications. As will become apparent, I am skeptical that most of these

purported justifications succeed. Some of my reasons for skepticism are already

covered to an extent in earlier works by Milton Friedman and Walter Gellhorn,

among others.

2

However, some of my skepticism is in response to sophisticated

arguments grounded in the presence of deep information asymmetries between

provider and client in particular professions. These arguments were not suffi-

ciently appreciated by earlier critics of occupational licensing requirements and

deserve a response. Ultimately, I argue that the most promising line of defense

for occupational licensing requirements is that some professions should require a

minimum threshold of quality. This is because the absence of such a minimum

threshold would produce unacceptable social effects. This justification, if

1.

2. MILTON FRIEDMAN, CAPITALISM AND FREEDOM 137–61 (40th Anniversary ed. 2002); Walter

Gellhorn, The Abuse of Occupational Licensing, 44 U. CHI. L. REV. 1, 6–27 (1976).

860 THE GEORGETOWN JOURNAL OF LAW & PUBLIC POLICY [Vol. 19:859