Wednesday, May 17, 2006

Plumbing the depths of occupational licensing

Posted by Craig Westover | 11:58 AM |  

A comment on my column today on occupational licensing requirements raises some good points that deserve further comment.

The writer compares the rationale behind occupational licensing with building codes and traffic laws. He also notes that the criteria I listed in the Sunrise Act really are statements about “public good” and “helping consumers make wise choices.” His points drive to the issue of what is the role of government in protecting “public health and safety.”

The writer is correct that the criteria for regulating occupations do constitute a public good and help consumers make wise choices. The point is, in a criteria-based system the flow is from the specific instance to the general. In other words, the process starts with neutral criteria; and action is proposed and measured against the criteria. If it meets the criteria (plural intended), then the action is taken and is ipso facto in the public good because it met the criteria.

The arbitrary approach is to simply declare an action “in the public good” with no underlying neutral criteria to justify that statement. That is the problem in Minneapolis for sign hangers. By law a license applicant is required to submit an application, pay a fee and provide proof of insurance and bonding. However, any application can be rejected by the city for any reason. There are no standards or guidelines and no appeals process. Why? The city merely says to ensure quality work. What does that mean? There are no criteria.

The writer also mentions plumbers specifically as an occupation that ought to require licensing because the work is hidden behind walls and certainly does affect health and safety. Again, that’s true, but the question then becomes is licensing the least restrictive means of achieving the objective of ensuring public health and safety while at the same time keeping the field competitive and open to new competitors.

You be the judge. According to the Institute for Justice study, here’s what a plumber must go through to be licensed in St. Paul --

Most people are familiar with plumbers. They are knights in shining armor when drains are clogged or a new appliance needs installing. Consumers expect a certain level of professionalism and competency from plumbers. However, no reasonable person would expect a would-be plumber to pass two comprehensive licensing schemes that cover the same subject matter in order to legally unclog that pesky sink in Minnesota’s capital city. Unfortunately, that is precisely what must be done to work legally as a plumber in the City of St. Paul.

To become a plumber in St. Paul, you must first be licensed by the State of Minnesota.94 This generally requires four years of practical plumbing experience, consisting of at least 7,000 hours of practical experience as an apprentice,95 and passage of a license examination.96 In other words, an already-licensed plumber must be convinced to supervise you, as an apprentice, at the risk of creating future competition for his own business. Obviously, for reasons other than the difficulty of the state licensure exam, this requirement might prove a formidable barrier to entering the St. Paul market.

The City of St. Paul next requires any would-be plumber to take its very own Certificate of Competency test97 and otherwise comply with a duplicative licensing scheme that further stifles competition in the plumbing industry (and, of course, collects extra fees98). Thus, the City of St. Paul will deem you “competent” to be a plumber only after you find a market incumbent who is willing to invite future competition, put in four years of apprenticeship, take two very similar tests, fill out numerous forms, and pay upwards of $315 in city and state fees. Rocket science seems easy by comparison.

Is that process the “least restrictive means” of achieving public health and safety?

The alternative to occupational licensing is not a complete “buyer beware” system. That is not the point. The rule of law does not simply mean that government passes laws. It means that laws are based on specific rationales related to the objectives they are suppose to achieve.

Without workable criteria backing them up, occupational licensing laws specifically and public health and safety laws generally become little more than the means by which the powerful inflict their whims on the rest of us. That is the what this issue is all about.