Feb

7

The Licensing Racket: How We Decide Who Is Allowed to Work, and Why It Goes Wrong
by Rebecca Haw Allensworth

A bottom-up investigation of the broken system of professional licensing, affecting everyone from hairdressers and morticians to doctors, lawyers, real estate agents, and those who rely on their services.

Pamela Van Giessen writes:

When my dad was suffering from dementia and it was too stressful on him to go places, I called in a podiatrist to take care of his feet and toe nails. I asked the doctor if he could also clip my dad’s fingernails, at least on his right hand which suffered constant trembles from a stroke. I did not feel confident doing it with the tremors.

The podiatrist informed me that he was not licensed to clip fingernails. I asked who was licensed and was told that in IL only manicurists and nurse aids in care homes can clip fingernails. I asked him if he thought it would be a good idea to take my dad to a manicurist (or have one come to dad) given his tremors. Dr said “no, and probably no manicurist wants to trim your dad’s fingernails.”

I called the state licensing board to complain and was told this rule existed for a good reason to protect people like my dad. I told them that this was absurd and not protective of anyone except this bizarre bureaucracy. I was told that I was being disrespectful and they hung up on me. Fortunately the podiatrist took pity on the situation after seeing my dad and broke the rules.

Licensing (and certification) is a racket. It is meant to keep some out and it is also a lucrative racket for states, licensing boards, and non-profit organizations. The CFA Institute makes over $275M annually on the CFA certification (and it costs less than 1/2 that to administer the program).

Sushil Rungta comments:

Agreed! Licensing is a racket and in many instances, unnecessary. Often, it is nothing more than a means to generate revenues for the licensing authority!

Rich Bubb writes:

I completely agree with the 'license Non-sense' of some (ahem) rationales. My basic take is that if some institute was involved, they were rarely better than learning-by-doing types (eg., me). When I was working thru attaining six sigma black belt (SSBB looked good on the resume), the major quality name (withheld) institution was over-hyping their SSBB program only as some sort of easy-to-attain achievement, [but] with their seminars/classes/literature/mentors/videos/etc., only. Truth to tell, I knew so-called 'withheld-name'-SSBB-certified wingnuts that knew nearly 10% of what I'd literally done already. Oftentimes by doing deep research and generally trying to learn more about More.

Henry Gifford provides the NY POV:

In New York City a plumbing license is like a license to print money. More and more work requires a permit, and therefore a license. Hire a licensed plumber for an agreed-on price of $10,000, usually the bill comes in at about double. Hire by the hour and keep careful track of the hours and you still get a bill for double. After you pay you notice the permit is not closed out (signed off by the licensed plumber), which becomes a violation on the property, and a bar to clean title at sale. Want it signed off? Maybe another $10K?

Word is that the number of licenses is fixed - they give them out only at the rate that licensed plumbers die. Applying for a license requires seven years of "experience", which is defined as being an employee of a licensed plumber - basically sons and nephews, someone with ambition who buys a van and tools and goes to work is nobody's employee, thus never can get a license. Then comes the written test.

Not long ago the written test had a drawing of all the drains in a building, with inch sizes marked next to each piece of pipe. The question required calculating how many ounces of lead are required to pour molten lead into all the joints in the drain pipes to connect them - something not done regularly for 50 years at the time of the test. The drawing was a copy of a copy of a copy, not legible - required guessing at the pipe sizes, or else buying the answer for cash.

Then comes the practical test, which not long ago required melting lead pipes together, but without the help of a propane torch or any other torch. Thee equipment supplied is a cast iron kettle and a stove - melt some lead or solder in the kettle, throw the molten lead at the joint, wipe it smooth with an asbestos rag or similar.

I know a guy who got his experience and passed both tests, but the city didn't give him a license. He went to court and sued the city, and after much time and expense finally won - hooray! The judge ordered the city to give him a license. But, last I heard, he still didn't have a license.

Other parts of the US are catching up. Most professional licenses cannot be transferred to another city. A friend of mine in NYC married a guy in Vermont who was a counselor to juvenile delinquents. His experience in Vermont was not transferrable to NY State - he would have to start all over, thus she moved to Vermont.

Does this system benefit anyone but holders of existing licenses, and the powers that be? I don't think so.

Stefan Jovanovich gets historical:

The licensing presumption goes back to the royal charters of the English kings and queens. The sovereign has the (God-given) authority to decide who has the right to practice a trade. The Saddler's Company received theirs from Edward I in 1272.

Gyve Bones writes:

Very interesting account of how the plumbers' trade operates in NYC. It reminded me of Mark Twain's account of how the Pilot's Association formed on the Mississippi River. Samuel Clemens, before he took the pen name "Mark Twain", was a riverboat pilot, and a member of the Association so he knows and tells the story well in Life on the Mississippi. He shows how at first the really good pilots avoided joining the Association out of pride and because they had such a good reputation they didn't need it. And the Association became the refuge of B and C rank pilots… at first. But Twain shows how the Association provided an information edge about the current state of the river conditions which the "outsiders" could not match, and were able to develop a monopoly once the underwriters found that Association pilots were better at avoiding claim losses.

Here's a link to Life on the Mississippi, Chapter XV which contains the story.

I think there are excellent insights in this story how any sort of trade establishes a guild system that protects the trade, creating moats to competition. We see it with doctors, lawyers, undertakers, nail salons, barbers, electricians &c. &c. ad infinitum. Lots of the work of legislatures is creating laws for these associations to institutionalize the moats with the force of law for the various guilds.

The previous chapters detail very interestingly on how riverboat pilots do their jobs, which is a fascinating context if you want a deeper dive. It's one of my favorite books of all time.


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