Trump’s Secretary of Labor Attacks One of Our Worst Job Barriers
I was disappointed when President Trump’s first choice for Secretary of Labor, restaurant magnate Andy Puzder, was forced to withdraw his name. He would have made great use of the office as a Bully Pulpit to highlight the many ways the government impedes job growth through counterproductive regulations – such as the absurd notion that it’s possible to legislate better lives for workers by ratcheting up the minimum wage.
Nevertheless, I’m pleasantly surprised by the performance so far by the man Trump subsequently chose for the position, R. Alexander Acosta, who was confirmed in April. Acosta, a former U.S. attorney and law school dean, has already made his mark by identifying one of America’s biggest obstacles to job growth and economic revitalization, namely occupational licensing.
In a speech to the American Legislative Exchange Council’s annual conference on July 21, Secretary Acosta criticized occupational licensing regulations on three grounds: they create a barrier to people who want to work; they impede mobility by anchoring people to the places where they are licensed; and they obstruct Americans who want to leverage technology to expand their employment opportunities.
In his address, (quoted in this Daily Signal piece) Acosta stated, “Certifying skills and specialized knowledge helps consumers. That is far different, however, from using licensing to limit competition, bar entry, or create a privileged class.”
Quite right, Mr. Secretary, although I think you overrate governmental competence in ensuring that workers are indeed competent in their fields. Competition and the need to establish and maintain a good reputation do at least as good a job as licensing by government officials in that regard, and without the harm done by legally blocking entry into the market.
Acosta’s crucial point is that occupational licensing is often used by interest groups simply as a means of preventing competition in their markets, thus raising prices for consumers (while lowering quality of service) and keeping enterprising people from finding good jobs.
A recent book by William Mellor and Dick Carpenter (both of the Institute for Justice) entitled Bottleneckers strongly underscores Acosta’s argument. Going into great detail on the hundreds of battles the Institute has fought against those who “game the government for power and private profit” (as the subtitle says), Mellor and Carpenter take the reader deep into the ugly world of interest group politics.
To give but one example, in many cities, the taxi and limo markets have been turned into cartels due to licensing laws. The licensed company or companies ruthlessly use the law to keep out new competitors, most often minority individuals who would mainly serve (at least initially) the minority populations in their cities who are poorly served by the licensed competitors.
Those laws frequently give the incumbent firms the right to oppose the licensing of new competitors on the grounds that the market already has the correct number of cabs. So-called experts can always be paid to produce a study purporting to find that allowing new entrants would somehow damage “the public interest.” That’s usually enough for the regulators to rule against the applicants.
You should read this enlightening book. Don’t be surprised when the politicians who are the real villains – without their connivance the cartels that keep people from pursuing a wide range of licensed jobs couldn’t last – often turn out to be blatant hypocrites.
Some are Democrats who profess to care about helping the poor, but are happy to take cash from the advocates of licensing — even though the main beneficiaries of a free market would be poor people in their districts, who’d have more job opportunities in the absence of licensing. And some are Republicans who profess to support free market competition – but not when an interest group with deep pockets says, “If you vote to keep our cartel alive, we’ll support your re-election campaign.”
Secretary Acosta has done a great public service in bringing up this issue, but solving it is not really within the Labor Department’s purview. The harmful licensing laws are state and local creations and need to be repealed by the governments that enacted them.
Or, when the special interests behind them prove to be too strong to defeat legislatively, they must be fought in court.
Doing that is where pro-liberty litigation groups such as the Institute for Justice enter the picture. Lawsuits brought to strike down anti-competitive, job killing licensing laws usually succeed if the judge isn’t one of those dreary types who won’t see through the facile “public safety” claims that are nearly always advanced to defend them.
How about turning your fire on minimum wage laws next, Secretary Acosta?
Originally published on Forbes.