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Dude, Where's My Job?

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Dude, Where's My Job?

September 12, 2013

Graduation day, and all the joy that comes with it, is three months behind recent graduates. Reality is setting in, and most of these young adults are asking, “Why can’t I find a job?”

Over half—52 percent— of recent college graduates are either un- or underemployed, according to the New York Federal Reserve. The Bureau of Labor Statistics reports that 34 percent of recent high school graduates are jobless.

The economy suffers when these young adults are not able to invest in their human capital. These negative economic effects reverberate into the future since employment becomes harder to find the longer people are without a job.

One contributor to this problem most people are not familiar with is occupational licensing—requirements that individuals obtain government sanctions to work. The justification behind licenses is concern for public safety.

However, these barriers to entry do not serve the public’s interest. They raise unemployment, lower economic growth, and increase consumer costs. The burden of proof should be placed upon proponents of licenses. From data that are available, they have some explaining to do.

The Institute for Justice detailed licensing requirements for 102 low- and moderate-income occupations—the jobs sought by graduates [See the Institute for Justice Report here]. On average, workers are forced to spend nine months in education or training, pass an exam, and pay over $200 in fees, all in the name of public safety.

This safety rationale is questionable. Almost all occupations are not universally licensed and the burdens imposed are not uniform across states. Seven states require a license for tree trimming, yet the other 43 do not suffer from an epidemic of ugly hedges.

To work as a barber, Nevada requires over two years’ education and training. Wyoming requires 175 days. Why does a barber need four times more training in Nevada than in Wyoming, especially when there is no recorded difference in the quality of haircuts between the two states?

The difficulty starting work in particular occupations often shows little correlation with the job’s health or safety risks. Interior designers require on average $364 in fees and 2,000+ days of experience. On the other hand, bus drivers, who are licensed in every state, can begin working with less than $100 and 90 days experience. It should not be more difficult to become an interior designer than a bus driver. No one has died from mismatched pillows.

The extent of occupational licensing laws correlates with youth unemployment. Looking at the Institute for Justice’s rankings, the top 10 states with the most onerous licensing laws have an average 16-24 year old unemployment rate of 17 percent. That rate is 13 percent for the bottom 10, a difference of 4 percent.

Low- or medium-skilled positions that directly appeal to young people often require licenses. In Virginia, yoga instructors needed certification by state bureaucrats who likely knew nothing about the recent health craze. Nevada restricts teaching how to apply makeup. These cases not only hurt those who want to teach, they negatively affect young people who want to learn a craft and put that skill to work.

In Philadelphia and Washington D.C., cities known for their colleges and historic sites, students are not free to give visitors tours without first navigating the hurdles of licensing laws. Repairing computers is another job that appeals to youth. But, doing this without a private detective’s license in Texas carries a hefty penalty—a $14,000 fine and year in jail. The barriers to entry in this industry unnecessarily add up to three years of apprenticeship or a degree in criminal justice. Neither option is easy or cheap.

Lawmakers should focus on protecting the public safety rather than established businesses and their entrenched interests. Every level of government, from city councils to Congress, should roll back unnecessary and destructive regulations.

With the adoption of a commonsense system, it will be easier for young people to move past high school or college graduation and start building their lives and careers, lowering the stubbornly high unemployment rate. Only then will they start contributing to our still-ailing economy.

 

Jared Meyer is a research associate at the Manhattan Institute for Policy Research

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