Emerging Occupations Seeking Regulation

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Emerging Occupations Seeking Regulation
Expect the Unexpected Are We Clearly Prepared?

• Morris M. Kleiner
• University of Minnesota

Council on Licensure, Enforcement and Regulation
2006 Annual Conference
Alexandria, Virginia
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Reviewed in the NY Times and the Wall Street
Journal
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Comparisons in the Trends of Two Labor Market
Institutions Licensing and Unionization
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Why Are States Regulating More and More
Occupations?

• The Perfect Storm
• Incentives for Members of the Occupations
• Incentives for Professional Associations
• Incentives for Legislators
• Incentives for the Governors Office

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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Regulations Impact on Net Quality
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Occupational Licensing and Quality

• There were no differences in the Changes in
  Complaints in Certified (Minnesota) versus
  Licensed (Wisconsin) Occupations during the
  period1994 -2001 for Physicians Assistants,
  Physical Therapists, and Respiratory Therapists

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Occupational Licensing and Quality Evidence from
Malpractice Insurance Rates

• pastoral counselors (licensed in 3 states),
  marriage and family therapists ( licensed in 40
  states )and professional counselors (licensed in
  42 states) .
• occupational therapists (licensed in 26 states)
• Practical and Vocational nurses (licensed in 46
  states)
• In none of the occupations were malpractice
  insurance rates significantly lower for similar
  persons ( by age and experience) in states that
  required licensing

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Influence of Licensing on Prices

• The impact of licensing on prices to consumers
  ranges from 4 to 35 percent, depending on the
  type of commercial practice and location.

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Estimates of reallocations and lost output

• Compared to total wage income in the U.S. of 5.8
  trillion dollars in 2000 the estimated
  reallocation of earnings from consumers to
  licensed practitioners is between 116 billion and
  139 billion in 2000 dollars using this approach.
  Using economy-wide medium estimates of the
  elasticity of labor demand of .3 the economic
  loss to society of licensing is between 34.8 and
  41.7 billion dollars per year (Hammermesh, 1993).
  However, the estimate is less than one-tenth of
  one percent of total national consumption
  expenditures annually.

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Newly Emerging Licensed Occupations Examples

• Mortgage Brokers Almost no home mortgages thirty
  years ago went through brokers, now 60 percent of
  all home mortgages or refinancing are originated
  through brokers
• Little regulation in the 1970s now all states
  except Alaska regulates either the establishment
  or the employees
• Little evidence that quality has improved

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Child Care Centers

• Impact of minimum quality restrictions on the
  market for child care
• Influence of tougher legal standards reduces
  competition among Child Care Providers and raises
  profits

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Interior Designers

• Four states with full licensing and 18 additional
  ones have lesser forms of occupational regulation
• During the past two years interior design
  coalitions lobbied for additional regulations in
  10 states
• No evidence that more regulation results in fewer
  complaints to monitoring agencies

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Forestry

• The number of states licensing Foresters
  increased from 3 to 7 from 1978 to 2001, and the
  number regulated in all forms from 12 to 16.
• In Maine there was a 10 percent decline in the
  number of persons in the occupation following
  licensing.
• Net state revenues for forestry regulatory body
  that monitors the occupation more doubled
  following tougher regulation.

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A Licensing Fable
Not long ago the Governor of a Midwestern state
was approached by a representative of a
particular trade anxious to enlist the Governors
support in securing passage of legislation to
license their occupation.
Governor, they said, passage of this licensing
act will ensure that only qualified people will
practice this occupation it will eliminate
charlatans, incompetents or frauds and it will
thereby protect the safety of the people of this
state
The Governor, from long experience, was somewhat
skeptical. My distinguished guests, he asked,
are you concerned with advancing the health,
safety and welfare of the people under the police
powers of this state or are primarily interested
in creating a monopoly situation and eliminate
competition and raise prices?
The spokesman for the occupational group smiled
and said, Governor, were interested in a little
of each.adapted from Council of State
Governments Report, 1952.
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Speaker Contact Information

• Morris M. Kleiner
• University of Minnesota
• 260 Humphrey Center
• University of Minnesota
• Minneapolis MN. 55455
• Phone [phone]
• kleiner_at_umn.edu