Licenses are required for many occupations in the United States in order to improve the quality of services offered to people. The justification given is that it ensures the holders of the license are skilled enough to practice their trade and further prevents rogue elements from exploiting the people in need of specific services. However, some licensure bodies have used licensure as a tool to limit the number of professionals in particular fields. They have so much influence that they even determine the number of people that will join the profession using the training institutions. The misuse of licensure to limit opportunities goes against the free enterprise and unfettered opportunities that are provided for in capitalism. The ethical approach used in this essay is utilitarianism.
Merits of Occupational Licensure
Occupational licensure mostly benefits the services providers who are already licensed. The licensed individuals have lower unemployment rates, higher wages, and a higher likelihood of having pension or retirement plans. The number of occupations that require licensure have increased significantly in the last two decades (Thornton, Timmons, and DeAntonio 47). The implication of the number of occupations requiring licensure is that individuals are required to apply for licenses to continue in the same occupations while fresh graduates are required to get a license before they begin their career.
Occupational licensure requires the members to continue improving their knowledge of the career, leading to better quality services in the long run. Occupational licensure gives the consumers confidence regarding the services they are receiving from certified individuals. This is the case with AMA, the licensure body of physicians in the United States. People are aware of the stringent requirements for the profession taken by AMA. Therefore, they intuitively know that the doctors attending to them in hospitals are competent. The licensure bodies push the members to keep themselves updated with the latest technologies in their fields. The labor suppliers are held to high standards by the licensure boards. The boards also provide a form of redress against malpractices for the consumers who have been harmed.
Demerits of Occupational Licensure
Occupation licensure has the drawback of restricting labor supply in certain professions. This is especially so in the medical field. Shortage of physicians in the country is caused by the stringent requirements of the AMA. The licensure agency blocks certain number of applicants from attaining the license. This happens despite there being a shortage in the profession. The AMA does that with the intention of helping the special interest group by raising their wages. The limited labor supply has the effect of harming the general population. Shortage of physicians causes longer wait times and they are overworked (Thornton, Timmons, and DeAntonio 50). The medical prices go up, as do health insurance products. The limiting of the number of licensed labor suppliers has the effect of monopolizing an industry, called the “closed shop effect.” The licensure body inevitably becomes a monopoly because all professionals have to go through it for certification. This monopoly goes against the principles of capitalism.
Need for Occupational Licensure
Occupational licensure is important, but the powers wielded by the licensure bodies should be checked to ensure that there is adequate labor and the market and the prices of the services reflect the economic and market realities. The fields that are in most need of licensure are the ones dealing with health and safety of the population (Thornton, Timmons, and DeAntonio 50). If the services offered by an individual has the potential of impacting the health or safety of the consumer in a negative manner, then they need to be licensed to ensure that they are qualified enough to carry out that task. The fields that need to be licensed include the medicine, housing sector, commuter transport, food manufacturers, drug manufacturers, among others. Some services such as cosmetics, interior design, law and entertainment do not require licensure because they do not impact the health or safety of the population. The competence and quality of services offered by the professionals in the latter industries should be used to gauge their effectiveness as opposed to their licensure.
Occupational Licensure in Capitalism
Capitalism places emphasis on the need for the market forces to control and determine the price of services and products in the market. However, occupational licensure has the effect of creating barriers of entry by professionals who have a low-income background. Further, the limiting of labor in certain professional fields results in the creation of a monopoly in the sector. The monopoly created is not in line with the principles of capitalism. The licensure bodies also tend to keep important information regarding the industry from the public domain. This has been proven to be the case for AMA, which is the licensure body for physicians in the US (Friedman). Denying consumers from accessing information that would be beneficial to them in making purchase decisions is an infringement on the ideals of a free market. The institution of licensure boards is to ensure the quality of services offered to consumers is acceptable and to weed out uncertified individuals who might want to exploit the needs of the consumers. Beyond the mandate of quality control and protection of consumers, occupational licensure should not institute any other limitations. The limitation on the number of licensed professionals by various licensure agencies restricts the freedom of individuals to pursue certain careers or trades.
While licensure ensures the safety and health of the consumers, it does not necessarily make the market more efficient. The artificial shortage of labor created by the licensure bodies of certain professions creates a “closed shop effect” leading to market inefficiency. The consumers should be provided with all the information they need to make decisions whether to buy particular services or products. However, the provision of information should not replace licensure. Many professionals, in the absence of licensure, are likely to offer substandard services knowing they will not be answerable to the authorities. Even qualified professionals are likely to get involved in malpractices to increase profits if they are not held accountable.
The sentiments made by Friedman and company regarding the role of the AMA in medicine profession are accurate. AMA is responsible for the restrictions on the free market in medicine. It has done so by limiting the number of physicians trained and licensed every year. These actions of the agency have gone beyond the mandate of protecting the health and safety of the consumers. Licensure is not an all-or-nothing issue. Licensure is a part of the checks and balances that should be provided for the free market to assure the consumers of the quality of the services and products purchased. Licensure also plays the important role of putting way malicious service providers by demanding requirements that malicious traders cannot fulfill. One way remedying the constraints caused by licensure is to significantly increase the number of professionals licensed and having requirements that are achievable by most of the individuals interested in such professions.
Friedman, Milton. Licensure And Laissez Faire. Print.
Thornton, Robert, Edward Timmons, and Dante DeAntonio. “Licensure Or License? *: Prospects for Occupational Deregulation 1.” Labor law journal 68.1 (2017): 46-57. ProQuest. Web. 29 June 2019.