See Inside February 2007

License to Work

Professional licensing: Road to social atherosclerosis?

Milton Friedman, the Nobel laureate economist, noted that the destruction of the medieval guilds was indispensable to the creation of the modern world. In his 1962 classic, Capitalism and Freedom, he explained that "there has been a retrogression, an increasing tendency for particular occupations to be restricted to individuals licensed to practice them by the state."

Friedman's warning came at a time when only 5 percent of jobs required licenses. Today the proportion has grown past 20 percent. The states, which obtained the right to grant professional licenses from the U.S. Supreme Court in 1889, now cumulatively recognize at least 800 occupations that require them. But only about 50--including medicine, dentistry, law, engineering, accounting, barbering and cosmetology--are registered in all 50 states. Currently up to half of all professionals are in occupations that require a license, but the extent of licensing varies considerably by state.

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