Occupational licensing laws cost Minnesotans dearly. Every year, consumers unnecessarily pay an estimated $2 billion extra for services because the state Legislature and city councils have enacted licensing laws that needlessly limit entry into field after field. This government-imposed restriction on competition allows those licensed to charge extra for their services, adding to the costs Minnesotans must pay to providers for everything from animal chiropractors to wild rice dealers.
Some try to argue that licensing is designed to protect consumers, but the truth is that the higher costs don't lead to higher quality. As Prof. Morris Kleiner of the Humphrey Institute wrote, "From the evidence I was able to gather, there is no overall quality benefit ... of licensing to consumers." So what do we get for all the extra money we are forced to spend because of government-created scarcity in various occupations? Little more than higher prices and the reallocation of income from consumers to practitioners of licensed occupations.
And be warned: Licensing is growing. Today, 29 percent of the workforce is required to hold a license. That's up from 3 percent in the 1950s. In at least one state, more than 800 occupations require a license to enter.
Few trade associations have been more determined to get lawmakers to squelch their competitors than the American Society of Interior Designers (ASID), which began lobbying legislatures in the late 1970s for restrictions on who could work as an interior designer. Those efforts were motivated by a desire to establish interior design as a "profession" distinct from and not subordinate to architects, and to suppress competition within the interior design industry by erecting substantial barriers to entry.
Despite its zealous pursuit of additional licensing laws, the ASID-led pro-regulation faction has thus far met with limited success. Only three states -- Florida, Louisiana and Nevada, plus the District of Columbia -- regulate who may perform interior design work.
Those who advocate for more such regulation have consistently failed to produce any credible evidence of public harm resulting from the unregulated practice of interior design. For example, in October 2000, Colorado's Department of Regulatory Agencies concluded that it was "difficult to see a benefit to the public in regulating interior designers." At least eight other states have reached the same conclusion in rejecting efforts by ASID and others to enact protectionist legislation designed to eliminate competition and maintain high barriers to entry into the interior design field. More recently, Prof. Kleiner's students published findings that showed no health or safety benefit from regulating interior designers.
Since 2003, ASID-Minnesota has tried four times to get the state Legislature to fence out its competitors by enacting a licensing regime. The first three times, legislators saw no merit to even granting the bills a hearing. Last year, ASID-Minnesota's bill was heard for the first time and went down to a near-unanimous defeat in the Senate Commerce and Consumer Protection Committee.
Not deterred, ASID-Minnesota is back at the Legislature this year with a nearly identical bill that requires all those working in commercial design to go back to school, pass examinations, submit exhibits and pay unnecessary fees -- or else stop practicing. If enacted, this bill would shut down Minnesotans throughout the state who have extraordinary creativity, skills, experience and satisfied clients.
Businesses throughout Minnesota will also be harmed if this bill passes. It will leave purchasers of design services with fewer options, and undoubtedly higher fees. The bottom line is that would-be entrepreneurs shouldn't be blocked from pursuing an honest enterprise because of the whims of a senseless government-imposed cartel. And customers should not be forced to give up their right to choose the interior designers who meet their qualifications for a project.
In the coming years, good-government DFLers and pro-market Republicans have $2 billion worth of annual reasons to overhaul Minnesota's anti-competitive licensing laws. For now, voting down this bill would be a good start.
Lee McGrath is the executive director of the Minnesota Chapter of the Institute for Justice, a public interest law firm that describes itself as the nation's only libertarian public interest law firm.
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