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Friday, May 17, 2019

Joe Biden Is Preaching a Free Market Lesson to Unions. Is Anyone Listening?

We should thank Joe Biden—a serious discussion on occupational licensing is long overdue.

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Like most politicians, Joe Biden has some rather bad ideas, and some of them have had a far-reaching adverse impact on the most vulnerable in American society.

However, the former veep, who is making his third bid for the presidency, also deserves credit for taking on a sacred cow of Big Labor: occupational licensing laws.

Biden’s Bid

In April, while kicking off his campaign in Washington, DC, before the International Brotherhood of Electrical Workers, which represents some 750,000 workers and retirees, Biden described the silliness of some of these laws.

“You know if you are a hair braider, you braid people’s hair, you have to get a license to do something like 400 hours of training,” Biden told the union crowd. “It’s all about not helping workers.”

One of every three US workers today must get permission to work.

Four hundred hours of training to braid hair is indeed ridiculous, as is the $22,000 price tag of a cosmetology license in some states. The banality of such laws prompted Aicheria Bell and Achan Agit, two black hairdressers, to file a civil suit against Iowa’s cosmetology board in 2015, a battle they won when lawmakers agreed to exempt hair-braiding from the state’s cosmetology licensing laws.

The story received a great deal of media attention, and following the public outcry it generated, many states have been rolling back or eliminating hair-braiding licenses.

One Small Instance

This is well and good, but hair-braiding is hardly an isolated example of occupational licensing absurdity. Other professionals commonly burdened with expensive, time-consuming licensing regulations include manicurists, masseuses (for humans and horses), YouTube video producers, shampooers, and locksmiths.

Many of the occupations protected by licensing laws traditionally offered poorer Americans a path to income mobility and self-sufficiency.

This list, unfortunately, is only the tip of the proverbial iceberg. Economists Morris Kleiner and the late Alan Krueger estimated that one of every three US workers today receive licenses to work.

Getting permission from the government before one can work—whether it’s to braid hair, mow lawns, or wash cars—isn’t just silly. It’s expensive for consumers and would-be workers and inhibits income mobility, especially for poor Americans.

As economist Veronique de Rugy has pointed out, many of the occupations protected by licensing laws traditionally offered poorer Americans a path to income mobility and self-sufficiency.

“By erecting barriers to entry to these occupations, we erect barriers to entry to achieving the American dream,” wrote de Rugy.

The ways occupational licensing laws harm lower-income Americans are myriad.

What Are the Laws Really About?

So why are they so common? It’s not because they improve the quality of service; they don’t. It’s about the dollars. (Always the dollars, to paraphrase the immortal Nicky Santoro.)

Unions have traditionally been the biggest proponents of occupational licensing.

In their study, Krueger and Kleiner concluded that by reducing competition, these protectionist policies result in 14 percent higher wages for workers already licensed. (These findings dovetail with research analyzing data from other countries, including China.) Kleiner, speaking to the Goldwater Institute, said this is little more than crude monopolism.

“If you’re using government, you have a monopoly,” Kleiner said in 2017. “So only individuals who meet these criteria are allowed to earn a living. Anyone else, if they try to get paid for performing those services, they are severely fined or could be sent to jail.”

Because of the protection it offers, unions have traditionally been the biggest proponents of occupational licensing, which is what makes Biden’s position so noteworthy. Consider what he said to another labor crowd, this one in Pittsburgh.

“Why should someone who braids hair have to get 600 hours of training? It makes no sense,” Biden said. “They’re making it harder and harder in a whole range of professions, all to keep competition down.”

Why, he continued, should steelworkers, pipefitters, and firefighters care about “getting rid of these unnecessary hoops out there? Because we have to restore America’s ability and individual Americans’ ability to fight for their own dignity.”

Modern Problems Require Modern Solutions

In a presidential primary that thus far has been largely defined by political pandering and gaudy campaign wishlists, Biden is talking to union shops about pro-growth reforms that would make it easier for thousands of enterprising service workers to reach the next rung on their way to the American dream.

To thrive in the 21st century, Americans require a growth mindset and an entrepreneurial spirit, both of which are frustrated by bureaucratic mechanisms that make “no sense” (to borrow Biden’s phrase) beyond padding the bottom line of those who enjoy monopoly power.

We should thank Joe Biden—a serious discussion on occupational licensing is long overdue.

  • Jonathan Miltimore is the Editor at Large of at the Foundation for Economic Education.