Does the Public Need Protection From Rogue Auctioneers?
Mississippi’s governor now has to approve new rules from professional licensing boards. By Luke Hilgemann and Russ Latino | 777 words
Should auctioneers and landscapers have to get a state license before plying their trades? In some states they do—and the realization that this is a problem seems to be dawning from coast to coast. Earlier this year the acting chairwoman of the Federal Trade Commission, Maureen Ohlhausen, announced a task force aimed at reducing occupational licensing. “I challenge anyone,”she said, “to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”State lawmakers in Mississippi are taking the need for reform to heart. Two weeks ago Gov. Phil Bryant signed into law H.B. 1425, which will significantly rein in licensing boards. Too often industries have been left to regulate themselves, which in practice means entrenched players write rules to keep out new competitors. It helped that occupational licensing boards were largely immune from federal antitrust laws. But that changed two years ago when the Supreme Court ruled on North Carolina State Board of Dental Examiners v. FTC. The case involved the state board’s regulation of teeth-whitening services. Dentists had complained that nondentists were offering teeth whitening at lower prices. So the board, which was composed primarily of dentists, began sending cease-and-desist letters. When the FTC objected, the board claimed immunity. The Supreme Court did not buy that argument. In a 6-3 decision, the justices held that the dental board could not claim immunity, because it was controlled by “active market participants”and was not “actively supervised”by the state. In other words, lawmakers can’t simply set up a professional licensing board, back away to let the industry regulate itself, and then allow that industry to claim that it is acting on behalf of the state. Enter Mississippi’s law. H.B. 1425 explicitly endorses competition and says that the state’s policy is to “use the least restrictive regulation necessary to protect consumers from present, significant and substantiated harms.”Under the law, the governor, the secretary of state, and the attorney general must review and approve all new regulations from professional licensing boards to ensure compliance with the new legal standard. This should be a model for other states. Lawmakers from Florida to Nevada have moved recently to curb occupational licensing, but their efforts often have been limited to certain professions or specific barriers to work. Mississippi’s law goes further, since it covers all licensing boards controlled by industry participants, spells out a pro-competition test, and requires new rules to be approved by elected officials accountable to voters. Mississippi has smartly targeted the core problem: Anticompetitive regulations harm the economy, slow job growth, and raise consumer prices. There was a time when these restrictions were largely limited to doctors, lawyers and other high-income occupations. In the 1950s only about 1 in 20 American workers needed a license, but now roughly 1 in 4 do. This puts a real burden on the economy. A 2012 study by the Institute for Justice examined 102 low-income and middle-income occupations. The average license cost $209 and required nine months of training and one state exam. On the list of states with the most licenses, Mississippi was fifth. Barbers needed one, and so did landscape workers and auctioneers. Even the Obama administration saw the problem. A 2015 report from the White House said that licensing can “reduce employment opportunities and lower wages for excluded workers.”In 2011 three academic economists estimated that these barriers have result in 2.85 million fewer jobs nationwide, while costing consumers $203 billion a year thanks to decreased competition. When new licenses are created, proponents argue they will protect the public. But the 2015 White House report concluded that “most research does not find that licensing improves quality or public health and safety.”How would a bad auctioneer pose a safety risk? Or think about it this way: The Institute for Justice study says that Mississippi “is one of only 10 states to license landscape contractors.”Does that mean residents of the other 40 states need to be on the lookout for perilously misplaced bushes or hazardously scattered mulch? The real intent behind many occupational licensing laws is to protect the business of the people who sit on the regulatory boards. Often they are accountable neither to elected officials nor voters, so they have no incentive to serve the public interest. That’s why Mississippi’s law is so important: It is a sure sign that state leaders are starting to recognize the importance of ending this state-sanctioned protectionism and giving more citizens the freedom to experience the dignity of work. Mr. Hilgemann and Mr. Latino are, respectively, chief executive officer and Mississippi state director of Americans for Prosperity.■
Wall Street Journal