Who’s Afraid of a Deregulated Plumbing Industry?

In the end, the market would fill the void, and the consumer would reap the benefits.

On May 26, the Texas Legislature failed to reach an agreement to extend the life of the Texas State Board of Plumbing Examiners. Further, they failed to transfer the department to the Texas Department of Licensing and Regulation. This, in effect, would have deregulated the plumbing industry in Texas. The department was temporarily in "wind-down" mode and had until September 2020 to wrap up and cease all operations, but on June 13, Governor Abbott signed an executive order keeping the board open and operational until 2021 when the 87th legislature is due to convene.

occupational licensing creates barriers in the free market that make it difficult and expensive for new actors to enter the market.

The concerns of plumbers, should the board shut down, ranged from the devaluation of their certification to safety concerns, and they had been vocal about their wishes to extend the agency via a special session. Instead of calling a special session, however, the governor stated his ability to renew the program without legislative approval and did just that. While some were grateful to Abbott for extending the life of the agency, the use of executive privilege to overturn a legislative decision unfortunately goes against two traditionally republican principles: the power of the legislature over the executive and the belief in the free market.

State deregulation of the plumbing profession meant, first and foremost, that Texas would not be administering tests and subsequent certifications/licenses. The root of this problem is occupational licensing and all the burdens that come with it. Occupational licensing creates barriers in the free market that make it difficult and expensive for new actors to enter the market. This barrier affects immigrants, poorer people, and former prisoners more than others because they are met with expensive costs and long wait times. These licenses don’t promote entry or prevent monopolies; rather, they protect the biggest and wealthiest of actors. These barriers are of bi-partisan concern. The Institute for Justice, which is opposed to occupational licensing, regularly informed the Obama Administration regarding them.

Licensing as with Net Neutrality 

Bringing the attention back to the Board of Plumbing Examiners, the failure to renew the department meant that government licenses would no longer be necessary to be a "plumber." If the board hadn’t been reinstated by the governor, could we have seen something similar to the FCC revocation of Net Neutrality? Leading up to Net Neutrality revocation, we heard doomsday stories of the inaccessibility of the internet, something that never materialized. In fact, it had the opposite effect. If the state government had stopped regulating the profession, there still would have been nothing stopping local governments from stepping in to take their place.

Further, the 71,000 licensed plumbers in the state of Texas would not have suddenly lost their merits, skills, and qualifications. The deregulation also would have given more power to the consumer to choose who to hire as a plumber; their standards would not suddenly disappear either. With endless company review sites at their disposal, consumers can find the proper candidate to be their plumber from a wide array of options.

In the end, the market would fill the void, and the consumer would reap the benefits.

With this new power for consumers as a result of deregulation, companies would have had to compete to have the best performing and most qualified plumbers. This could be achieved in several ways outside government licensure, such as vocational programs (who would also be competing to up their standards in the absence of regulation) or internal company training. This could also lead to a revival of an apprentice program—again, the 71,000 licensed plumbers don’t suddenly lose their skills.

Finally, but not exhaustively, concerns from plumbers raised concerns regarding the range of plumbing work. For example, plumbing is not just leaky pipes and clogged drains but dealing with gas, sewage, and water pipes. However, by having some plumbers with basic skills and others with more extensive knowledge, companies could differentiate prices between household plumbers fixing a leaky pipe and those who are needed to fix problems dealing with more complex tasks.

Free-Market Solutions

In the end, the market would fill the void, and the consumer would reap the benefits. As it stands, there is already a shortage of plumbers in both Texas and the nation, and waiting eight months for a plumbing license in Texas does not help the shortage. The nature of the sunset review provisions in the Texas legislature is to ensure government agencies are effective and useful, and seeing as the legislature did not renew amid a shortage, perhaps it was not useful.

How can we expect to close the gap or live up to the prospect of the American Dream if there are staggering barriers to that dream?

Liberalizing occupational licensing rules opens the door to economic success by removing unnecessary hurdles to individual success. A time-tested profession like plumbing can allow anyone to potentially reach the "one percent," especially if people are not confronted with insurmountable barriers like waiting eight months for a license. So, how can we expect to close the gap or live up to the prospect of the American Dream if there are staggering barriers to that dream?

The answer is: we can’t. Had Governor Abbott not renewed the Board of Plumbing Examiners, we would have likely seen the first domino to fall in a long line of deregulation restoring the free market and the American Dream. For a state that prides itself on economic liberty, this was a missed opportunity by the governor to stand on principle and liberate the market.