Licensing began with medicine and law; now it extends to 20 percent of the U.S. workforce, including hair stylists and auctioneers. In a new book, the legal scholar Rebecca Allensworth calls licensing boards “a thicket of self-dealing and ineptitude” and says they keep bad workers in their jobs and good ones out — while failing to protect the public. SOURCES:Rebecca Allensworth, professor of law at Vanderbilt University. RESOURCES:"The Licensing Racket: How We Decide Who Is Allowed to Work, and Why It Goes Wrong" by Rebecca Allensworth (2025)."Licensed to Pill," by Rebecca Allensworth (The New York Review of Books, 2020)."Licensing Occupations: Ensuring Quality or Restricting Competition?" by Morris Kleiner (W.E. Upjohn Institute for Employment Research, 2006)."How Much of Barrier to Entry is Occupational Licensing?" by Peter Blair and Bobby Chung (British Journal of Industrial Relations, 2019). EXTRAS:"Is Ozempic as Magical as It Sounds?" by Freakonomics Radio (2024).
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Hey there, it's Stephen Dubner with one last reminder to come see Freakonomics Radio live in Los Angeles on February 13th. I will be joined on stage by Ari Emanuel, the CEO of Endeavor, and RJ Cutler, the documentary filmmaker who made the recent Martha Stewart doc, as well as films on Billie Eilish, Elton John, and Coming soon, the Dodgers-Yankees World Series.
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What does a hairdresser have in common with a lawyer? How about an interior designer and a doctor, an auctioneer and a funeral director? These are not jokes. I'm sorry. I wish they were. What these jobs all have in common is that they require a professional license, which is administered by a licensing board that is often made up of other doctors and funeral directors and hairdressers.
This may not be something you've ever thought about, and I wouldn't blame you. It's one of those things a friend of mine calls a MIGO topic. MIGO standing for my eyes glaze over. But when you think about how our economy works, these labor licensing rules are pretty important.
It is the most important regulatory institution we have in labor.
Rebecca Allensworth is a law professor at Vanderbilt University, and she's written a book about professional licensing. We Americans like to think of our economy as open and dynamic. Allensworth shows that in many ways it's not, and that these licensing boards help too many bad actors stay in their professions and keep too many good ones out.
And that's why she called her book The Licensing Racket.
Professional licensing is too onerous for certain professions. And it just makes the barriers too high. It keeps people out. And the investment in what you're getting for that regulation is not worth it. And then for the professions that are left, medicine, nursing, law, now we need something like a licensing board. Only what we have is terrible.
By the way, a working title for the book was Bored to Death.
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