Let’s start by conceding that the prevailing wages for many service industry jobs is very, very low, too low for a person to live on. There are all kinds of suggestions for why this is so, ranging from the sensible to the ridiculous, but never mind that now. That’s not the reason for this piece. The question here before the house is, “What the heck are we going to do about it?”
We all know the suggestion that the political Left has offered: raising the Federal minimum wage, probably to $15 per hour over time. Many of the supporters of this proposal seem to believe in the theory of immaculate inflation, the assertion that we can force such a wage mandate without losing any jobs or significantly raising the prices we all must pay for goods and services. The money will all come out of the pockets of the big corporations and the greedy executives and rich stockholders. (This ignores the basic fact that most people earning the current minimum wage or close to it work for small businesses, which are almost universally on very slim profit margins already.)
Anyone who’s paying attention today can plainly see that there are other pressures on wages that are already pushing them, gradually, upwards. I stopped this morning at a McDonald’s in an upscale suburb of Youngstown that has signs out announcing help wanted and promising a starting wage of $13 per hour. Almost every service business is looking for more help as business begins to ramp back up from the depths of the Covid-19 depression. My own employer, a small hotel, part of a four-property company, is offering to pay me $100 if I refer a friend who is hired and stays at least 90 days. I wish!
You’d think this might roll back a bit of the pressure for a minimum wage increase but it hasn’t. There are two main reasons for this. First, the current, allegedly progressive, Democratic Administration’s organized labor supporters need the increase to activate elevator clauses in some union contracts. Second, no politician lives on situations getting better. They live on “doing something.” They need this increase to show their supporters that they’re working for their interests.
But if you’re worried about the unfortunate burger flipper at your local fast food restaurant who’s making $10 or $11 an hour, I’ve got a better solution than raising the minimum wage: occupational licensing.
Seriously, hear me out on this. Hairdressers and barbers have hours and hours of required course work, and occupational testing, in order to receive a license from the state and be able to go to work cutting hair. For crying out loud, undertakers are licensed by the state. My daughter works for a real estate agency as office help. She doesn’t sell, and doesn’t particularly want to, but nevertheless, she is strongly considering taking a $2000 course of study and taking a test to receive a real estate license so that she can legally perform certain services having to do with making listings.
If licensing is good enough for these professions, why isn’t it good enough for burger flippers? Proponents of licensing laws will point out that hairdressers and undertakers deal with chemicals, etc., which could affect their clients’ health if not handled properly. But isn’t this true of food handlers as well? Haven’t we seen people die from foodborne contaminants like e-coli? Obviously, food handling is too important to be left entirely to the market.
The primary effect of vocational licensing is to restrict competition. That’s why the professions so regulated always support it overwhelmingly. You’re not free to set up a barber chair in your living room and start charging to cut hair without a license, so your would-be customers must go to someone with that lovely piece of government-issued paper.
This could work out for the burger flipper as well. Having to get that government license will serve to control the supply of available workers. When fewer people are in competition for those jobs, the wage is certain to rise. Now, this could have a deletory effect on the fast food business. But do we really need all the fast food restaurants we have now? Within five miles of my home, there are at least two Arby’s, three McDonald’s, two Wendy’s, two Burger Kings, and four, count ‘em, four Dunkins. If half of these closed down, it wouldn’t be a great hardship to me, although it could be tough on any workers who end up losing their jobs. And I’m sure that some, like the junior Senator from Vermont, would ask whether we really need all these competing brands, anyway.
Licensing of this kind would create some other opportunities as well. Entrepreneurs could open schools to train candidates for a burger-flipping license, covering a government-mandated number of hours and in exchange for reasonable tuition fees. State universities and junior colleges might get in on this act as well. Publishers would prepare textbooks and practice tests. Course providers would want to advertise, pumping additional money into media advertising revenues.
Honestly, I don’t see how anyone with a heart could oppose such a modest proposal. License burger flippers! Now!
Obviously (I hope), the above is an exercise in satire. The title “A Modest Proposal,” is drawn from the 1729 satire piece by Jonathan Swift, author of Gulliver’s Travels, which suggested that poor Irish people might sell their children for use as meat on the tables of wealthy Englishmen. I am not seriously proposing that the state license burger flippers.
Let me repeat that: I am not seriously proposing that the state license burger flippers.
Instead, the suggestion is offered here to shed some light on the scam that is much of occupational licensing in modern America. Today, there are some hesitant, tentative baby steps towards reducing the burden of such licensing, but it’s a difficult fight because, as we noted, there are entrenched special interests that benefit from preserving them.
Let’s stipulate, for the sake of argument, that the state has a legitimate interest in ensuring that the people practicing such vocations are professionally competent. I’m not at all sure I agree, but let’s go with this, just for the moment. Nearly four decades ago, I briefly detoured into the life insurance business, and received a license from the State of Ohio to engage in that business after passing a test administered by the state. I was not required to take any particular course for this, interestingly enough, or put in a required number of hours training. I studied on my own and when I passed the test, I was in. Today, that same license requires completion of a 40-hour course. A background check and passing a test are also required. The hurdles for the real estate license my daughter is considering is much higher. Four courses, totalling 120 hours, are required, as are other minimum educational standards, as well as a load of paperwork, background checks, etc. And fees. Don’t forget the fees!
These strict requirements are not in place for the benefit of the people. They are in place primarily to keep people out, to limit competition, and to artificially raise the cost of engaging in those trades, which leads ultimately to the protected class being able to charge more for their services than a free market would require.
I am not, for one minute, saying that these vocations shouldn’t require a base of fundamental knowledge. I’ll even concede that the state might have some interest in keeping incompetents and conmen out of these businesses. But is a lengthy — and expensive! — course of study really necessary to ensure this? Shouldn’t anyone who can pass the required test be entitled to a license regardless of the educational background? Good grief, under these kinds of rules, Abraham Lincoln could never have been admitted to the Illinois Bar.
Does the state need to administer these exams, and maintain government boards to oversee them, or could the professional organizations of these various professions do just as well? Minimal government oversight could ensure that the exams are administered fairly.
Finally, do we really need to require a license to engage in these professions? Certainly, if we removed the licensing requirements, charlatans and poltroons would get into the professions. But if public licensing becomes private certification, if for instance, a professional organization of real estate professional issues certifications recognizing competent professionals, most customers would seek out the able and reject the unqualified. As a society, we’ve come to rely on government too much to do our due diligence and save us from our own follies. And we pay the price, literally, in terms of higher fees for licensed professionals whose numbers are limited by these regulations.
So the real modest proposal is this: let’s at least roll back, and hopefully, eventually end, this kind of licensing. In the long run, nobody benefits except the protected professional classes.