When “Protecting Consumers” Hurts Public Safety

When “Protecting Consumers” Hurts Public Safety

The most common justification for occupational licensing is an appeal to public safety in the form of consumer protection. In order to protect consumers from unscrupulous practitioners who will try to pull a fast one on their customers, the government must mandate licensing requirements (even if they are  “not generally a first-best solution”) in the case of information asymmetries that disadvantage the consumer.

Of course, there are many alternatives to licensing. But even if licensing were the most effective form of consumer protection (it’s not), licensing restrictions that make it harder for the formerly incarcerated to become employed are a danger to public safety.

Writing in ABA Journal, Ashley Nerbovig of the Marshall Project explains:

“In 2016, state and federal prisons released about 626,000 people, according to the U.S. Bureau of Justice Statistics. Studies show that having a job after incarceration makes a person less likely to return to prison…

Background checks became a licensing hurdle for Pennsylvania barbers in 2015 after the licensing board added a question about criminal history to the application. Pennsylvania’s Department of Corrections saw the number of inmates getting licensed through its training program take a severe dip. The overall number of barber and barber manager licenses awarded in the state annually dropped by almost 25 percent, according to the corrections department. Even after prison officials got the board to review mitigating factors, there were still fewer student inmates getting licensed.”

Because the economic prospects for ex-cons are already unfortunately dim, these folks are unlikely to enter the highly skilled professions where information asymmetries abound and “lemons” could easily give consumers a raw deal and do serious damage in the process.

The danger posed by a bad barber or manicurist, however, is next to zero (and ex-cons applying for a license still need to meet all of the requirements to receive a license, so “guarantees” of consumer protections are a constant between them and a licensee without a criminal record.). But the danger of someone who could have become a barber absent licensing restrictions for ex-cons being unemployed is more real.

Poverty is a strong predictor of criminality, so it seems fairly obvious that improving employment prospects for those with a high likelihood to reoffend would be an effective tool in the criminal justice policy toolbox.

There’s a clearly a place for government to intervene to prevent bona fide dangers to consumer safety. But the need for government to protect us from crime is even greater. Again, the case for licensing itself over other forms of consumer protection such as certification is weak at best.

If, however, there is ever a case where policymakers must make a trade-off between consumer protection and reducing recidivism, public safety should be given priority. The social and private costs of crime are far greater than those of a bad haircut.

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By |2018-07-11T08:36:41-07:00July 11th, 2018|Blog, Occupational Licensing|