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Crowded by the competition? Request an RCW

March 6, 2012

Law reviewed: Revised Code of Washington, Title 18

Are you one of those industries who are feeling crowded by the number of competing businesses? Or maybe you are a professional bemoaning the fact that every wet behind the ears college graduate has a Bachelor’s or Master’s degree in your occupation and the surge of entrants is likely to depress your wages and benefits. Don’t worry—our legislature can fix that.
With the aid of the Department of Health or Department of Licensing our Washington State legislators can ensure it is harder for people to enter your field and make it unlikely that competing businesses can threaten your monopoly.
Now we are not talking about those entities usually considered monopolies like electric companies or cell phone service providers, this misuse of the law applies to occupations like architects, cosmetologists, dental hygienists and East Asian medicine practitioners. All of these professions and a number of others have specific RCWs (Revised Code of Washington or state laws) affirming that working in a certain field requires permission from the government.
The problem with these laws is that the public is often unaware what the real motivations are behind the laws. It is not to improve public safety or the credibility of the industry. The real truth is these laws often come from industry itself as it seeks to create barriers to entry and superficially prop up costs by limiting the number of competitors. If this practice seems to be an unfair use of the law, it is. But with the current inattention from citizens regarding the law making process, it is easy and effective.
In fact, a recent study from Oxford University Press on government regulation of occupations found that in the last 50 years the proportion of workers whose occupation requires them to have a license from the government has grown nearly six fold, impacting 38 percent of the workforce. In other terms, in 1950 one in 20 U.S. workers needed a license from the government to work, by 2006 that number was one in three.
And what is the impact of this licensing? Better quality, lower costs and overall benefits to consumers? The answers are exactly the opposite.
The study, “Labor market policy for the 21st Century” by Alex Bryon and Morris Kleiner found that licensing results in negative outcomes for consumers by driving up costs. Limiting the number of dental hygienists, for example, results in a reduced access to dental care. It has also created higher prices without a corresponding increase in the productivity of practitioners.
Overall the Byron and Kleiner report found that the relationship between occupational licensing and wages is “consistent with the idea that members of an occupation raise wages by using the powers of government to drive up requirements and capture work for the regulated workers.”
So professions that want their members to be licensed can benefit from less competition and higher wages while the consumer suffers reduced access and higher costs.
At times, this “licensing” game even takes a nearly comical turn when occupations like “Ocularists” need to be licensed. What is an Ocularist? It is the person who makes fake eyeballs. Yes, the person who creates that life-like version of the human eye used by those who have suffered a deformity or injury.
In 1980 the state legislature required that Ocularists be licensed through the Department of Health and have 10,000 hours apprenticeship training, pay $125 to take an exam and $200 for license renewal. Why? Because, as the legislative record states, “custom prosthetic eyes are manufactured and fitted by personnel that are not licensed under the law and results in a conflict among professions.”
So there was not a surge in black-market fake eyeball making, nor was there a number of unsafe optometrists making/fitting eyeballs; instead there was a tussle over who should get to make them.
As a result, the State of Washington only has seven Ocularists statewide. An informal Statesman survey also found the average cost of a fake eyeball is around $3,500. Sounds like the regulation met its goal of reducing the number of Ocularists and keeping consumer costs high.
If we want this kind of legislative abuse to stop we must do the following three things: 1. Ask your legislators to carefully scrutinize any proposals for occupational licensing for the element of self-interest. 2. Don’t ask legislators that government licenses be created for occupations with the false notion it will improve the professionalism of the occupation or its customer service. Instead, look to professional organizations for certifications that assure quality without restricting who can practice in the field. 3. Ask questions, demand quality and do more for yourself. No matter what you are purchasing, from healthcare to automobiles, take the time to be educated what quality means and ask critical questions of the vendor. Also, whenever possible, don’t be a consumer and see if you can be your own “service professional” when it comes to carpet cleaning, automobile repair or basic medical needs, for example. However, under no circumstances should you try to make your own fake eyeball. You need a license for that.

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