The labor market for millennials is roughly than for their parents, partially due to onerous licensing requirements that prevent workers from competing with established businesses.
Occupational licensing laws, once unknown to most Americans 50 years ago, are now necessary for almost one out of every three jobs in America, according to Bloomberg.
That protects workers already with licenses from competition, and it artificially limits opportunity for Americans trying to improve their economic positions.
“Welcome to the modern economy, where increasingly, everything not compulsory is forbidden,” Megan McArdle wrote. “We are hedged around with rules to protect us, to protect other people, to protect some theoretical victim who exists only in the minds of regulators and judges. And there’s reason to worry that this red tape is getting wrapped so tight that it risks rendering us immobile.”
The deluge of licensing requirements is another restriction that hampers the labor market. It makes the market less competitive, less innovative, and less flexible. The United States has moved in that direction for decades.
In Europe, it’s even worse: Greece’s youth unemployment rate is 49 percent, Spain’s is 45 percent, and Italy is 40 percent. Labor regulations that favor existing businesses over potential competitors develops a perpetual underclass of citizens. They don’t have the social capital to find a job, and legal restrictions make their burden even more difficult to surmount.
The effects are worse for millennials without a college degree.
“Licensing rules are a particular problem for young workers trying to break into the job market, especially those without a college degree. The unemployment rate for adults ages 18 to 35 with neither a license nor a college degree was 9.9 percent in 2015; for those with a license (but still no degree), it was 5.2 percent. Those who do manage to find full-time jobs earn 13 percent less than those with a license,” Ben Casselman wrote.
The battle about inequality of opportunity isn’t on campus. It’s on Capitol Hill. The accumulation of so many licensing regulations has even caught the attention of the Obama administration, which issued a report in July that made the case for reform.
“In order for the economy to successfully continue to innovate and grow, we must ensure that we are able to take full advantage of all of America’s talented labor. By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars,” the report noted.
The current licensing system is resilient. It’s complicated on the state and federal levels, inconsistent, and has many special interests that benefit from its requirements. To remove those will be a challenge for any politician. The creeping regulations, grown over decades, have hampered the opportunity for millennials to test their entrepreneurial skills or forge an alternative path that doesn’t end in student debt.
If politicians profess concern for the welfare of young workers, they’ll have to confront those excessive licensing requirements.
