Vance Ginn Economics
  • Home
  • About
  • CV
  • Media
  • Podcast/Speeches
  • Blog/Research
  • Research
  • Teaching
    • ECON 2301-Princ of Macro
    • ECON 2302-Princ of Micro
    • ECON 3352-Energy Eco
  • Home
  • About
  • CV
  • Media
  • Podcast/Speeches
  • Blog/Research
  • Research
  • Teaching
    • ECON 2301-Princ of Macro
    • ECON 2302-Princ of Micro
    • ECON 3352-Energy Eco

Occupational licensing contributes to Texas’ labor shortages

10/28/2018

 
Picture
Commentary at McAllen Monitor.

​Texas has job openings; Texas has workers willing and eager to fill them. Where’s the disconnect that has resulted in labor shortages in a number of fields? It could be occupational licensing.

In many ways, the Texas model of limited government is a blueprint for D.C. and other states. The Federal Reserve Bank of Dallas’ latest reading of Texas’ economy is very positive. Personal income growth in the second quarter of 2018 was 6 percent — the highest in the nation. And the U.S. Bureau of Labor Statistics recently noted that Texas’ annualized private sector job creation rate of 3.9 percent is about double the national average of 2 percent.

Yet there are labor shortages in several fields. There are not enough qualified workers to fill the jobs available. If this problem persists, the ability of Texas to sustain its economic momentum will be restrained.

One qualification, which often presents an unnecessary, artificial barrier to employment and prosperity, is occupational licensing.

These laws say that willing workers must get a permission slip from state bureaucrats in Austin. To obtain the permission slip, aspiring workers need to pass exams, pay fees, complete minimum levels of education and training, or meet other entry requirements.

In 2015, more than 24 percent of workers in Texas had a license. That makes sense for family doctors and surgeons. But hairdressers, auctioneers and (in some states) interior designers? Not so much.

We highlight the problems presented by overly burdensome occupational licensing in Texas in a new report published by the Texas Public Policy Foundation.

According to the Institute for Justice’s ranking of occupational licensing for states, Texas is right around the middle of the pack — ranked 21st in the burden presented by licenses for low-income occupations. And unfortunately, Texas has mostly been moving in the wrong direction.
Between 1993 and 2012, Texas added licensing requirements for 22 low-income occupations. Data from the Texas Department of Licensing and Regulation indicate a 460 percent increase in the number of licenses issued by the department, far surpassing the state’s population growth of 37.5 percent in that period.

By making it harder for aspiring workers in Texas to enter the job market, licenses artificially inflate wages — and this means higher prices for the services provided. National estimates suggest that licensing inflates wages of professionals by about 15 percent. And this means consumers pay higher prices.

In addition, individuals looking to enter a new field may be prevented from achieving their dreams.

Proponents of these licenses claim that it protects the public’s health, safety, or welfare. But the risk of harm presented in these professions varies dramatically. Bad haircuts aren’t fatal. Neither is poor auctioneering or interior decorating.

It’s important to note that occupational licensing is often at best used as a signaling device for quality service, but it’s not the only way to regulate a profession. Proponents claim there’s only a binary choice between occupational licensing and no regulation at all, but there are many other ways to protect consumers.

Private certification can be used to signal to consumers who provide quality service; auto mechanics use this method quite effectively. The government can perform random safety inspections, as it does in the food services industry. The market can also regulate and provide information to consumers about bad actors via online ratings services like Yelp.

Licensing also serves to constrain consumer choice in the market for health care.

In Texas, patients have a difficult time seeing nurse practitioners without significant interference from physicians. Consumers should be granted the ability to obtain quality care from highly trained medical professionals like nurse practitioners for basic health care, especially in areas with doctor shortages.

The Texas model has achieved some amazing results over the years. We should not let occupational licensing get in the way of Texans achieving their hopes and dreams.

Edward Timmons, Ph.D., is director of the Knee Center for the Study of Occupational Regulation at St. Francis University; and Vance Ginn, Ph.D., is director of the Center for Economic Prosperity and senior economist at the Texas Public Policy Foundation.

Comments are closed.

    Vance Ginn, Ph.D.
    Chief Economist
    ​TPPF
    ​#LetPeopleProsper

    Vance Ginn, Ph.D., is founder and president of Ginn Economic Consulting, LLC. He is chief economist at Pelican Institute for Public Policy and senior fellow at Young Americans for Liberty and other institutions. He previously served as the associate director for economic policy of the White House’s Office of Management and Budget, 2019-20.

    Follow him on Twitter: @vanceginn

    View my profile on LinkedIn

    Archives

    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    January 2015
    November 2013
    September 2013
    May 2013
    February 2013
    August 2012
    July 2012
    January 2012
    May 2011
    April 2011

    Categories

    All
    Biden
    Book Reviews
    Budgets
    Capitalism
    Carbon Tax
    Congress
    COVID
    Debt
    Economic Freedom
    Economic Prosperity
    Economy
    Education
    Energy Markets
    Fed
    Free Trade
    Ginn Economic Brief
    Healthcare
    Immigration
    Inflation
    Interview
    Jobs Report
    Let People Prosper
    Licensing
    Louisiana
    Margin Tax
    Medicaid
    Minimum Wage
    Occupational Licensing
    Opportunity Project
    Pensions
    Podcast
    Poverty
    Property Taxes
    RAB
    Regulation
    Rules
    School Choice
    Socialism
    Spending Limits
    Taxes
    Tax Foundation
    Testimony
    Texas
    Transparency
    Video
    White House

    RSS Feed

Proudly powered by Weebly