'The Licensing Racket' exposes flaws in occupational licensing laws
Rebecca Haw Allensworth’s The Licensing Racket reveals how professional boards prioritize self-interest over consumer protection.
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| Illustration by Iryna Lupashchenko |
By Nada Fadiyah and Novanka Laras
The Licensing Racket: How We Decide Who Is Allowed to Work, and Why It Goes Wrong, by Rebecca Haw Allensworth
Occupational licensing laws have become a growing concern in the United States, affecting nearly a quarter of all workers. In The Licensing Racket, Vanderbilt law professor Rebecca Haw Allensworth investigates how professional boards regulate various fields, from hair braiding to medicine, often prioritizing their own members over consumers. Her research reveals a broken system that restricts competition, inflates costs, and fails to uphold public safety.
The book opens with a striking historical reference: the Venus of Willendorf, a prehistoric statuette with intricately braided hair, proving that hair braiding has existed for at least 30,000 years. Yet today, in many U.S. states, hair braiders must obtain a costly license requiring hundreds of hours of cosmetology training—despite the practice posing no significant health risk. This absurdity is part of a broader problem in occupational licensing, one that Allensworth dissects with compelling research.
In the 1950s, only about 5% of American workers required a government license to work. Today, that figure has soared to nearly 25%, largely due to what Allensworth describes as a “ratchet effect,” where professional groups successfully lobby legislatures to create barriers to entry in their fields. While most people agree that doctors, nurses, and lawyers should be licensed to ensure public safety, the licensing of hair braiders, barbers, and interior decorators often serves little purpose beyond limiting competition.
Allensworth explores numerous cases where excessive licensing requirements have harmed workers, raising costs without improving quality or safety. The Institute for Justice, a nonprofit legal group, has fought against such restrictions and won several legal battles proving that these regulations often lack a rational basis. However, Allensworth argues that the issue extends beyond small trades—occupational licensing is deeply flawed at its core, even in critical fields like medicine and law.
How licensing boards protect their own interests
One of Allensworth’s key findings is that licensing boards, which oversee various professions, are largely self-regulated. Governments may enact occupational-licensing laws, but they rarely enforce them directly. Instead, professional boards—typically composed of industry members—handle interpretation and enforcement. This structure creates a predictable outcome: these boards consistently favor their own members over consumers.
Through extensive research, including attending hundreds of board meetings, Allensworth discovered that licensing boards often ignore consumer complaints while aggressively punishing unlicensed workers. For example, at the Tennessee Board of Alarm-System Contractors, most consumer complaints involve poor installation, code violations, or high-pressure sales tactics. Yet, rather than disciplining members for these infractions, the board primarily targets unlicensed workers. As Allensworth notes, the board was ten times more likely to act against an unlicensed practitioner than to address complaints about poor service or safety violations.
This pattern is not unique to alarm-system contractors. Boards regulating auctioneers, cosmetologists, and barbers also prioritize eliminating competition over ensuring quality. Consumers care about service quality, but boards are primarily concerned with enforcing licensing laws—often at the expense of those they claim to protect.
While excessive licensing for hair braiders and interior decorators may seem like minor injustices, the implications of weak oversight in the medical field are far more alarming. Allensworth documents numerous cases in which medical boards failed to act against doctors and nurses engaged in serious misconduct.
One of the most disturbing cases involves a surgeon known as “Dr. Death.” After performing a catastrophically botched operation, a fellow surgeon assumed he must be an imposter and reported him to the medical board. Yet, despite multiple complaints, the board took no decisive action. By the time authorities finally intervened, the doctor had completed 37 spinal surgeries, 33 of which resulted in permanent injury or death. Instead of swiftly removing dangerous practitioners, medical boards often prioritize protecting their own, citing physician shortages as a reason for leniency.
The problem extends beyond individual cases. The National Practitioner Data Bank (NPDB) tracks physician misconduct, but the American Medical Association (AMA) has fought to keep this information from the public. When Congress attempted to make the NPDB accessible, the AMA successfully lobbied against it. This secrecy allows dangerous doctors to continue practicing while limiting transparency for patients seeking safe medical care.
Given the failures of occupational licensing, how should the system be reformed? Allensworth advocates for reducing self-regulation by transforming licensing boards into independent, government-run bureaucracies with permanent staff and greater oversight. She believes this shift could help ensure licensing actually serves public interests rather than protecting industry insiders.
Others argue for a more radical approach: deregulation. In the past, industries like airlines, trucking, and natural gas were deregulated, leading to lower costs and increased efficiency. Some economists, such as Clifford Winston of the Brookings Institution, propose eliminating occupational licensing for lawyers entirely, replacing it with voluntary certification systems.
Voluntary certification already works in highly specialized fields. For instance, cybersecurity professionals do not require occupational licenses, yet certifications like the CISSP (Certified Information Systems Security Professional) effectively establish credibility. Similarly, chefs are not licensed to cook, but restaurants are subject to strict health inspections. A shift toward this model could eliminate unnecessary licensing while maintaining safety and quality standards.
The future of licensing in the age of AI
One factor Allensworth does not explore extensively is the role of artificial intelligence in reshaping occupational licensing. AI is already transforming fields such as legal research and medical diagnostics, automating tasks that once required licensed professionals. As AI-driven tools improve, they could reduce reliance on outdated licensing systems by providing objective measures of competence and service quality.
Additionally, medical education reform could help address physician shortages without lowering standards. Many European countries offer combined undergraduate and medical degree programs that take six years, compared to the eight or more years required in the U.S. Expanding such programs could produce more qualified doctors without relying on restrictive licensing practices.
The Licensing Racket provides a groundbreaking examination of a system designed to protect consumers but often serves to entrench professional monopolies. By exposing the flaws in licensing boards, Allensworth challenges readers to rethink the purpose and impact of occupational licensing laws.
The time has come to reconsider whether licensing truly serves public safety or simply protects established professionals at the expense of workers and consumers. Whether through independent oversight, deregulation, or technological advancements, reform is essential to creating a fairer, more competitive labor market.
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