The Licensing Racket

2025-12-05

Download

Nearly 30 million workers, or roughly one in five workers throughout the country, are required to have a professional license before they can do their jobs.That’s more than twice the number of workers who belong to unions. And it’s almost ten times the number who earn the minimum wage. But in comparison to those other economic arrangements, curiously little attention is given to the process that governs licensing, the perverse outcomes it so often leads to, and the vulnerable workers who are affected by it.

Nearly 30 million workers, or roughly one in five workers throughout the country, are required to have a professional license before they can do their jobs.

That’s more than twice the number of workers who belong to unions. And it’s almost ten times the number who earn the minimum wage. But in comparison to those other economic arrangements, curiously little attention is given to the process that governs licensing, the perverse outcomes it so often leads to, and the vulnerable workers who are affected by it.

Cardiff’s guest on this episode is Vanderbilt law professor Rebecca Haw Allensworth, author of “The Licensing Racket: How we decide who is allowed to work, and Why it goes wrong.” Among Cardiff’s picks for the economics book of the year, it is the product of not just a scholarly understanding of the topic, but of years and years of painstaking reporting, interviewing hundreds of people, and unearthing a variety of frankly shocking anecdotes.

She and Cardiff discuss:

The legal and institutional design behind the boards that oversee licensing in each state
How the desire to protect the already licensed leads board to impose outrageous requirements for new licenses
The ludicrous rationalizations of so many licensing boards for erecting obstacles to new workers entering their professions
The shocking failure of licensing boards, especially within medicine, to actually fulfill the mission they are set up to pursue: protect public safety
How the ratcheting up of licensing requirements led to a standoff between nurses and doctors
How licensing hurts dynamism and entrepreneurship
The more substantive tradeoffs involved in licensing, including the pride and validation that existing practitioners feel in having a license
Which jobs shouldn’t require a license, and for those that do, a better way forward

All throughout, Rebecca shares with Cardiff the tales of the workers, board members, and the others she interviewed.

Related links: