The Economic Security of High Rents and Ridiculous Job Licensing

A confluence of two articles really got me thinking about exclusionary policy and economic security.

The first from the Wall Street Journal discussed the challenges of small town residents in moving to bigger cities. Migration is way down among this group (almost half of what it was several decades ago). The author cites an Obama White House report that puts heavy blame on the increasing use of occupational licensing:

Another obstacle to mobility is the growth of state-level job-licensing requirements, which now cover a range of professions from bartenders and florists to turtle farmers and scrap-metal recyclers. A 2015 White House report found that more than one-quarter of U.S. workers now require a license to do their jobs, with the share licensed at the state level rising fivefold since the 1950s.

Janna E. Johnson and Morris M. Kleiner of the University of Minnesota found in a nationwide study that barbers and cosmetologists—occupations that tend to require people to obtain new state licenses when they relocate—are 22% less likely to move between states than workers whose blue-collar occupations don’t require them.

The second article was about the challenge of building housing in New York in this lengthy discussion in the New York Review of Books. Exclusionary zoning is making it harder to build houses in many neighborhoods in the city, raising prices and driving more and more middle class workers out of the city. Although salaries have had a bit of growth over the decades, that minuscule growth has been dwarfed by the rapidly increasing rents we have seen in the city over the past ten years.

While housing and job protections seem to be quite politically quite different, the reality is that both occupational licensing and exclusionary zoning are really part of the same pattern: using regulations to stranglehold growth in this country in the name of economic security.

We usually think of economic security as instruments like job tenure, Social Security, Medicaid, housing vouchers, and bank account guarantees like FDIC, essentially programs and entitlements that provide a sort of “floor of vitality” to our lives. No matter what happens in our job or the global economy, we have certain protections that ensure that we can’t lose it all.

However, the increasing strain on the middle class coupled with the dearth of improvements to these entitlements to match them to the society we live in today has meant that middle-class voters have sought other vectors to protect themselves from the vagaries of the economy. Exclusionary zoning ensures that if you are already a home owner, that home will likely appreciate in value – whatever happens in the economy. Occupational licensing prevents new entrants into your field of endeavor, likely protecting a higher salary than one that is exposed to a fully competitive market.

In failing to provide a comprehensive if not luxurious safety net, we are channeling the anxieties of the middle class away from free market principles to government intervention and regulation of the economy. So instead of “real security,” we get this sort of Frankensecurity where we don’t really protect people all that much, but we do stranglehold whole swaths of the economy. To me, that seems like a terrible compromise, and one that conservatives and liberals should work together to find common ground on.

Image by Eric Schmuttenmaer used under Creative Commons.