FTC Staff Comments To the Nebraska State Senate Regarding A Number of Proposed Senate Bills That Would Loosen or Eliminate Certain Occupational Licensing Requirements In Nebraska

March 16, 2017

Matter Number

V170005

FTC Staff Letter To Senator Geist (143.37 KB)

FTC Staff Letter To Senator Larson (156.62 KB)

FTC Staff Letter To Senator Lindstrom (138.96 KB)

FTC Staff Letter To Senator Lowe (139.05 KB)

Office of Policy Planning
Bureau of Competition
Bureau of Economics
March 15, 2017
Hon. Senator Suzanne Geist
District 25
State Capitol
PO Box 94604
Lincoln, Nebraska 68509-4604
Dear Senator Geist:
We welcome the opportunity to share our views regarding a number of proposed
bills that would loosen or eliminate certain occupational licensing requirements in
Nebraska.1
In the 1950s, less than five percent of jobs in the United States required a license.2
Estimates today place that figure between 25 and 30 percent nationally.3 Nebraska falls
roughly in line with the national estimates: nearly 25 percent of Nebraska’s workforce
holds one of about 200 occupational licenses.4 In our view, the substantial expansion of
occupational licensing—in Nebraska and nationally—may likely be unnecessary and can
be harmful to consumers and competition.
We recognize that occupational licensing can be beneficial in specific areas,
typically when citizens would be at risk of considerable harm if services were provided
by unqualified professionals. For example, doctors are licensed, in large part, because it
1 This letter expresses the views of the FTC’s Office of Policy Planning, Bureau of Competition, and
Bureau of Economics. The letter does not necessarily represent the views of the FTC or any individual
Commissioner. The Commission, however, has voted to authorize staff to submit this comment.
2 See M ORRIS M. K LEINER , T HE H AMILTON P ROJECT, REFORMING O CCUPATIONAL L ICENSING B OARDS 5
(2015), http://brook.gs/1ZARuJ2.
3 See id.; Morris M. Kleiner & Alan B. Krueger, Analyzing the Extent and Influence of Occupational
Licensing on the Labor Market, 31 J. LAB . E CON. 173 (2013); Morris M. Kleiner & Alan B. Krueger, The
Prevalence and Effects of Occupational Licensing, 48 BRIT J. I NDUS. REL. 2 (2010).
4 Press Release, Office of Governor Pete Ricketts, Gov. Ricketts, Senators Unveil Occupational Licensing
Reforms (Jan. 10, 2017), https://governor.nebraska.gov/press/gov-ricketts-senators-unveil-occupational-
licensing-reforms. See also K LEINER , supra note 2, at 9.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

2
is too difficult for patients to evaluate the doctor’s training and skills. There is what an
economist would call a large “information asymmetry” between the patient and the
doctor and an unqualified doctor might do great harm to the public. In light of these
concerns, the state uses licensing to ensure the doctor achieves and sustains a minimum
level of competence.
Unlike physician licensing, occupational licensing in many other occupations
does not provide clear public benefits. For example, some states require interior
decorators to get a special license from the state. The state requires a license for this
occupation even though the normal operation of market forces already fully and reliably
protects the public from harm. If interior decorators are not good at their jobs, people will
simply refuse to buy their services. There is no discernable risk to the public from
allowing an incompetent interior decorator to fail, and the public can easily evaluate the
merits of interior decorators without any special assistance from the government.
The simple fact is that many more occupations resemble the interior decorator
example than the medical doctor example. Yet many occupations often are subject to
licensing requirements that are unmoored from legitimate health, safety, or similar public
policy objectives. Unnecessary licensing imposes compliance costs on anyone wishing to
enter a licensed occupation. Even modest licensing requirements can and do deter people
from entering fields they might otherwise wish to pursue. In effect, excessive licensing
acts as a state-created barrier for people seeking work.
These dynamics often are not lost on the current, licensed workers in a particular
field. Indeed, licensed workers often are strong proponents of licensing precisely because
being licensed directly benefits them economically. After all, licensing restricts the
number of potential competitors they may face, which may enable them to charge higher
prices. For this reason, policymakers should be skeptical of claims that licensing is
necessary to protect the public from some perceived ill, especially when looking beyond
the small subset of occupations where licensing has a clearly identified and appropriately
grounded public policy rationale.
FTC staff supports the Nebraska legislature’s ongoing efforts to review and,
where possible, streamline the state’s many licensure requirements. This reform initiative
has the potential to deliver significant benefits to Nebraskans, including Nebraskans
looking for new or better work within the state, as well as Nebraska consumers generally.
In this comment, we suggest a general framework for evaluating the competitive
effects of legislative proposals to modify Nebraska’s various occupational licensing
regimes. Although we do not comment specifically on each of the four legislative
proposals, the goal of the framework is to aid legislators, regulators, and other
policymakers in identifying those options that impose the fewest possible restrictions on
competition, consistent with public health, safety, and other legitimate policy goals. In
many situations, as current bills appear to recognize, it may be possible to eliminate
licensure requirements entirely.

3
I. Nebraska Occupational Licensing Reforms
FTC staff was asked to comment on four bills that would reduce or eliminate
certain restrictions on occupational licensing in Nebraska.
• L.B. 341 would allow banks to elect “active executive officers” as exempt
from the requirement to apply for and obtain licenses from the state
Department of Banking and Finance.5
• L.B. 346 would eliminate the license required for individuals to engage in
motor vehicle, motorcycle, or trailer sales.6
• L.B. 347 would reduce the licensure requirement for school bus drivers by
eliminating a rule that a driver’s license examiner of the Department of Motor
Vehicles test applicants’ qualifications to operate a bus and eliminate a
requirement to obtain a special school bus operator’s permit.7
• L.B. 348 would eliminate the license required for potato shippers.8
We understand that these four bills are part of a larger initiative on occupational
licensing reform in Nebraska, led jointly by state legislators and Governor Ricketts, and
which includes additional bills that would repeal licensing requirements in other
professions.9 Against the backdrop of such large-scale review, we focus on
procompetitive effects of loosening occupational licensing requirements more broadly,
rather than analyzing competitive effects with respect to each specific identified
occupation.
5 See letter from State Senator Brett Lindstrom, Neb. State Legislature, to Tara Isa Koslov, Acting Dir.,
Office of Policy Planning, FTC (Jan. 12, 2017) (on file with Office of Policy Planning).
6 See email from Patrick Roy, Legislative Aide to State Senator John Lowe, Neb. State Legislature, to Tara
Isa Koslov, Acting Dir., Office of Policy Planning, FTC (Jan. 13, 2017) (on file with Office of Policy
Planning).
7 See letter from Trinity Chappelear, Legislative Aide to State Senator Suzanne Geist, Neb. State
Legislature, to Tara Isa Koslov, Acting Dir., Office of Policy Planning, FTC (Jan. 17, 2017) (on file with
Office of Policy Planning). We understand that the Federal Motor Carrier Safety Act, which Nebraska has
adopted, already requires school bus drivers to obtain a commercial driver’s license with a special
designation to carry passengers. See 49 C.F.R. § 383 (2011).
8 See letter from State Senator Tyson Larson, Neb. State Legislature, to Tara Isa Koslov, Acting Dir.,
Office of Policy Planning, FTC (Jan. 13, 2017) (on file with Office of Policy Planning).
9 Press Release, supra, note 4. See also Office of Governor Pete Ricketts, Occupational Licensing Reform
Package,
https://governor.nebraska.gov/sites/governor.nebraska.gov/files/doc/press/OLR%20Fact%20Sheet%20201
7.pdf.

4
II. Competition, Occupational Licensing, and the Federal Trade
Commission
Competition is a core organizing principle of America’s economy.10 It gives
consumers the benefits of lower prices, higher quality goods and services, increased
access to goods and services, and greater innovation.11 The FTC works to promote
competition through enforcement of the antitrust laws, which prohibit certain transactions
and business practices that harm competition and consumers. The FTC also engages in
competition advocacy to urge decisions that benefit competition and consumers, in the
form of comments on proposed legislation and regulations, discussions with regulators,
court filings, and other advocacy channels.
The FTC has engaged in various advocacy efforts relating to licensing
requirements for occupations and professions. Since the late 1970s, the Commission and
its staff have conducted economic and policy studies,12 as well as submitted advocacy
comments to state and self-regulatory entities on competition policy and antitrust law
issues.13 Advocacies on occupational licensure have involved such professionals as real
estate brokers,14 electricians,15 accountants,16 dentists and dental hygienists,17 nurses,18
eye doctors and opticians,19 and veterinarians.20
10 See, e.g., N.C. State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101, 1109 (2015) (“Federal antitrust law
is a central safeguard for the Nation’s free market structures.”); Standard Oil Co. v. FTC, 340 U.S. 231, 248
(1951) (“The heart of our national economic policy long has been faith in the value of competition.”).
11 See, e.g., Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978) (noting that the antitrust
laws reflect “a legislative judgment that ultimately competition will produce not only lower prices, but also
better goods and services. . . . The assumption that competition is the best method of allocating resources in
a free market recognizes that all elements of a bargain—quality, service, safety, and durability—and not
just the immediate cost, are favorably affected by the free opportunity to select among alternative offers.”).
12 See, e.g., FTC STAFF, P OLICY P ERSPECTIVES: COMPETITION AND THE REGULATION OF ADVANCED
P RACTICE N URSES (2014) [hereinafter P OLICY P ERSPECTIVES],
http://www.ftc.gov/system/files/documents/reports/policy-perspectives-competition-regulation-advanced-
practice-nurses/140307aprnpolicypaper.pdf; C AROLYN COX & SUSAN F OSTER , B UREAU OF E CON., FED.
T RADE COMM ’N, T HE COSTS AND B ENEFITS OF O CCUPATIONAL REGULATION (1990),
https://www.ftc.gov/system/files/documents/reports/costs-benefits-occupational-regulation/cox_foster_-
_occupational_licensing.pdf.
13 Many of these advocacy comments can be found at http://www.ftc.gov/policy/advocacy/advocacy-
filings.
14 FTC and Department of Justice Comment to Governor Jennifer M. Granholm Concerning Michigan H.B.
4416 to Impose Certain Minimum Service Requirements on Real Estate Brokers (2007),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-and-department-justice-
comment-governor-jennifer-m.grahholm-concerning-michigan-h.b.4416-impose-certain-minimum-service-
requirements-real-estate-brokers/v050021.pdf.
15 FTC Staff Comment to the Hon. Glen Repp Concerning Texas H.B. 252 to Establish a System to
Voluntarily License Electricians and Electrical Contractors (1989),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-hon.glen-repp-
concerning-texas-h.b.252-establish-system-voluntarily-license-electricians-and-electrical-
contractors/v890034.pdf.

5
III. Competitive Considerations Regarding Occupational Licensing
All occupational licensing restrains competition to at least some degree, because it
limits the number of people who can provide certain services.21 Occupational licensing
rules typically specify entry conditions, define the various practices that constitute a
licensed occupation, and legally authorize such practices. Without a license, a worker in a
given field usually cannot compete to provide services, regardless of his or her skills and
qualifications. Unlicensed practice is prohibited by statute and may be subject to civil or
criminal penalties.
16 FTC Staff Comment to the Hon. Jean Silver Concerning Washington Administrative Code 4-25-710 to
Require Additional Academic Credits for Certified Public Accountants (1996),
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-honorable-jean-
silver-concerning-washington-administrative-code-4-25-710-require/v960006.pdf; FTC Staff Comment to
the Hon. Jim Hill Concerning Oregon H.B. 2785 to Propose Certain Restrictions on Competition Among
Accountants (1989), http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-
comment-hon.jim-hill-concerning-oregon-h.b.2785-propose-certain-restrictions-competition-among-
accountants/v890073.pdf.
17 FTC Staff Letter to NC Representative Stephen LaRoque Concerning NC House Bill 698 and the
Regulation of Dental Service Organizations and the Business Organization of Dental Practices (2012),
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-letter-nc-representative-
stephen-laroque-concerning-nc-house-bill-698-and-regulation/1205ncdental.pdf; FTC Staff Comment
Before the Maine Board of Dental Examiners Concerning Proposed Rules to Allow Independent Practice
Dental Hygienists to Take X-Rays in Underserved Areas (2011),
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-maine-board-
dental-examiners-concerning-proposed-rules-allow-independent-practice/111125mainedental.pdf.
18 Many of the individual advocacy comments regarding nursing restrictions, along with the research and
analyses underlying these comments are described in P OLICY P ERSPECTIVES, supra note 12.
19 FTC Staff Comment Before the North Carolina State Board of Opticians Concerning Proposed
Regulations for Optical Goods and Optical Goods Businesses (2011),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-north-carolina-
state-board-opticians-concerning-proposed-regulations-optical-goods/1101ncopticiansletter.pdf; FTC Staff
Comment to Hon. Doug Matayo Concerning Arkansas H.B. 2286 and the Fairness to Contact Lens
Consumers Act and Contact Lens Rule (2004),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-honorable-doug-
matayo-concerning-arkansas-h.b.2286-and-fairness-contact-lens-consumers-act-and-contact-lens-
rule/041008matayocomment.pdf.
20 FTC Staff Comment Before the Virginia Board of Veterinary Medicine Concerning Regulations to
Remove Restrictions on Advertising and Non-Veterinarian Relationships (1986),
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-virginia-board-
veterinary-medicine-concerning-regulations-remove-restrictions/p864641.pdf.
21 See, e.g., George J. Stigler, The Theory of Economic Regulation, 2 B ELL J. E CON. & M GMT. SCI. 3, 13
(1971) (“The licensing of occupations is a possible use of the political process to improve the economic
circumstances of a group. The license is an effective barrier to entry because occupational practice without
the license is a criminal offense.”).

6
Recent studies strongly suggest that the burdens of excessive occupational
licensing fall disproportionately on the most economically disadvantaged citizens.22
Another group particularly impacted by excessive occupational licensing are the spouses
of U.S. military personnel. Because members of the military move to new states
frequently, their spouses must repeatedly meet new and often different licensing
requirements as they move from state to state.
The harms of excessive state licensing are not limited to those looking for new
jobs. Licensing requirements may limit not only who is allowed to work in a particular
field, but also how they work. When the state mandates particular ways of doing things,
these regulations may stifle entrepreneurship and innovation. For example, one study
found that for a subset of low- and moderate-income jobs, the average license required
around nine months of education and training.23 In some cases, over the long-term, these
regulatory barriers to entry may severely impede the flow of labor or services to where
they are most in demand, potentially reducing consumer access to valued services.24
Additionally, when licensing reduces the number of people working in a given
field, that can blunt competition and may cause prices to increase. Several studies have
found that prices increase, sometimes significantly, due to licensing an occupation at the
state level.25 One estimate has shown that licensing restrictions can raise consumer
expenses by over two hundred billion dollars nationwide.26 This means that even citizens
who have never sought work in a particular area can be harmed by excessive state
22 See, e.g., D EPT. OF THE T REASURY, COUNCIL OF E CONOMIC ADVISERS, AND D EPT. OF L ABOR ,
O CCUPATIONAL L ICENSING: A FRAMEWORK F OR P OLICYMAKERS 12, 31 (2015); K LEINER , supra note 2, at
6; D ICK M. C ARPENTER II, P H.D., L ISA K NEPPER , ANGELA C. E RICKSON, AND J OHN K. ROSS, L ICENSE TO
W ORK: A N ATIONAL STUDY OF B URDENS FROM O CCUPATIONAL L ICENSING 6-7 (2012), http://ij.org/wp-
content/uploads/2015/04/licensetowork1.pdf.
23 C ARPENTER , K NEPPER , E RICKSON, AND ROSS at 14.
24 FTC staff comments on nursing regulations have focused on primary care provider shortages and the
abilities of advanced practice nurses and others to meet the needs of underserved populations. See generally
P OLICY P ERSPECTIVES, supra note 12, at 2, 20-26; Daniel J. Gilman & Julie Fairman, Antitrust and the
Future of Nursing: Federal Competition Policy and the Scope of Practice, 24 H EALTH M ATRIX 143, 145-
46 (2014), http://www.aacn.nche.edu/government-affairs/Antitrust-and-the-Future-of-Nursing.pdf. See also
FTC Staff Comment Before the Louisiana House of Representatives on the Likely Competitive Impact of
Louisiana House Bill 951 Concerning Advanced Practice Registered Nurses (2012),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-louisiana-house-
representatives-likely-competitive-impact-louisiana-house-bill-951/120425louisianastaffcomment.pdf
(regarding a bill that would have removed certain supervision requirements for APRNs working in
medically underserved areas or treating underserved populations); FTC Staff Letter to the Hon. Jeanne
Kirkton, Missouri House of Representatives, Concerning Missouri House Bill 1399 and the Regulation of
Certified Registered Nurse Anesthetists (2012),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-letter-honorable-
representative-jeanne-kirkton-missouri-house-representatives-concerning/120327kirktonmissouriletter.pdf.
25 See, e.g., K LEINER , supra note 2, at 15 (explaining that occupational licensing can result in price
increases by as much as 33 percent).
26 Id. at 6.

7
licensing because they may pay higher prices or receive lower quality services than
would otherwise prevail absent the licensing.
Further, the purported consumer protection benefits of licensing may not justify
the costs. Reductions in competition caused by licensing can also cause quality, choice,
and access to decline. Although well-meaning licensing rules may be designed to provide
consumers with minimum quality assurances, these rules do not always increase service
quality,27 especially if training or educational requirements do not directly relate to the
services a given professional provides.28
For these reasons, FTC staff urges legislators and regulators to consider removing
excessive, unnecessary licensing restrictions wherever possible. Liberalization of
occupational licensing may promote competition and benefit consumers. Benefits that
may flow from an expanded supply of qualified workers can include improved access to
services, lower prices, and improved service quality. Reform may also spur innovation in
how services are delivered.
We respectfully recommend that state legislators, regulators, and other policy
decision makers consider the following framework when evaluating changes to
occupational licensing law.
• What legitimate policy justifications, if any, were articulated when the original
license requirements were imposed?
• Are there currently any specific, legitimate, and substantiated policy objectives
that justify continuing the license requirements?
• If current, legitimate policy objectives are identified, does the furtherance of those
objectives likely outweigh the expected harms from licensing? Such harms may
include reduced economic opportunities, restricted employment, increases in
consumer prices, and reductions in quality or access.
• If state licensing appears justified, are there any less restrictive alternatives to the
current licensing system that still address the legitimate policy objectives, while
reducing burdens on the public? Are the licensing requirements narrowly tailored
27 See, e.g., Morris M. Kleiner & Robert T. Kurdle, Does Regulation Affect Economic Outcomes: The Case
of Dentistry, 43 J. LAW & E CON. 547, 570 (2000) (“Overall, our results show that licensing does not
improve dental health outcomes as measured by our sample of dental recruits. Moreover, treatment quality
does not appear to improve significantly on the basis of the reduced cost of malpractice insurance or a
lower complaint rate against dentists, where regulation is more stringent.”); C OX & FOSTER , supra note 12,
at 21-29.
28 For example, certain hair braiders are required to attend cosmetology schools that do not even teach hair
braiding as a condition of obtaining a license to do business in other states. See Jenni Bergal, A License to
Braid Hair? Critics Say Licensing Rules Have Gone too Far, STATELINE , P EW CHARITABLE T RUSTS (Jan.
30, 2015), http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2015/1/30/a-license-to-braid-
hair-critics-say-state-licensing-rules-have-gone-too-far.

8
to achieve the specific public policy purpose, or is there a less intrusive way to
achieve the public policy objective?
When the public benefits are slight or highly speculative, occupational licensing
may not be desirable in any form. Similarly, a specific regulation that imposes non-trivial
impediments to competition may not be justified. Even when particular regulatory
restrictions address well-founded consumer protection or other concerns, the inquiry
should not end there. If the restrictions are also likely to harm competition, we believe
that policymakers should consider whether the regulations could be more narrowly
tailored to minimize the burden on competition while still achieving other legitimate
policy goals. For example, a state could adopt a certification system in lieu of licensing,
which could allow consumers to choose between a certified, but potentially higher-priced
professional, and a lower-priced, noncertified professional.29
IV. 	Conclusion
We commend Governor Ricketts and Nebraska’s legislators for examining state
occupational licensing laws to determine whether such laws, on balance, help or harm
Nebraska citizens. State regulation of occupations can serve important public policy goals
and, when used appropriately, protect the public from harm. But, as illustrated by
economic studies and the Commission’s lengthy prior history and experience,
occupational licensing can also make consumers worse off. Licensing can limit
occupational opportunities and impede competition without offering meaningful
protection from even substantiated risks. For these reasons, we encourage the Nebraska
legislature to consider the likely procompetitive benefits of reducing or (where
appropriate) eliminating occupational licensing requirements, consistent with legitimate
policy concerns.
We appreciate this opportunity to present our views.
29 See, e.g., COX & FOSTER , supra note 12, at viii-ix. Moreover, there are additional mechanisms to protect
consumers that are arguably less restrictive than either licensing or certification, including professional
registries, mandatory disclosure requirements, and third party provision of quality information. Id. at 49-51.

9
Respectfully submitted,
Tara Isa Koslov, Acting Director
Office of Policy Planning
Ginger Jin, Director
Bureau of Economics
Tad Lipsky, Acting Director
Bureau of Competition

Office of Policy Planning
Bureau of Competition
Bureau of Economics
March 15, 2017
Hon. Senator Tyson Larson
District 40
State Capitol
P.O. Box 94604
Lincoln, Nebraska 68509-4604
Dear Senator Larson:
We welcome the opportunity to share our views regarding a number of proposed
bills that would loosen or eliminate certain occupational licensing requirements in
Nebraska.1
In the 1950s, less than five percent of jobs in the United States required a license.2
Estimates today place that figure between 25 and 30 percent nationally.3 Nebraska falls
roughly in line with the national estimates: nearly 25 percent of Nebraska’s workforce
holds one of about 200 occupational licenses.4 In our view, the substantial expansion of
occupational licensing—in Nebraska and nationally—may likely be unnecessary and can
be harmful to consumers and competition.
We recognize that occupational licensing can be beneficial in specific areas,
typically when citizens would be at risk of considerable harm if services were provided
by unqualified professionals. For example, doctors are licensed, in large part, because it
1 This letter expresses the views of the FTC’s Office of Policy Planning, Bureau of Competition, and
Bureau of Economics. The letter does not necessarily represent the views of the FTC or any individual
Commissioner. The Commission, however, has voted to authorize staff to submit this comment.
2 See M ORRIS M. K LEINER , T HE H AMILTON P ROJECT, REFORMING O CCUPATIONAL L ICENSING B OARDS 5
(2015), http://brook.gs/1ZARuJ2.
3 See id.; Morris M. Kleiner & Alan B. Krueger, Analyzing the Extent and Influence of Occupational
Licensing on the Labor Market, 31 J. LAB . E CON. 173 (2013); Morris M. Kleiner & Alan B. Krueger, The
Prevalence and Effects of Occupational Licensing, 48 BRIT J. I NDUS. REL. 2 (2010).
4 Press Release, Office of Governor Pete Ricketts, Gov. Ricketts, Senators Unveil Occupational Licensing
Reforms (Jan. 10, 2017), https://governor.nebraska.gov/press/gov-ricketts-senators-unveil-occupational-
licensing-reforms. See also K LEINER , supra note 2, at 9.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

2
is too difficult for patients to evaluate the doctor’s training and skills. There is what an
economist would call a large “information asymmetry” between the patient and the
doctor and an unqualified doctor might do great harm to the public. In light of these
concerns, the state uses licensing to ensure the doctor achieves and sustains a minimum
level of competence.
Unlike physician licensing, occupational licensing in many other occupations
does not provide clear public benefits. For example, some states require interior
decorators to get a special license from the state. The state requires a license for this
occupation even though the normal operation of market forces already fully and reliably
protects the public from harm. If interior decorators are not good at their jobs, people will
simply refuse to buy their services. There is no discernable risk to the public from
allowing an incompetent interior decorator to fail, and the public can easily evaluate the
merits of interior decorators without any special assistance from the government.
The simple fact is that many more occupations resemble the interior decorator
example than the medical doctor example. Yet many occupations often are subject to
licensing requirements that are unmoored from legitimate health, safety, or similar public
policy objectives. Unnecessary licensing imposes compliance costs on anyone wishing to
enter a licensed occupation. Even modest licensing requirements can and do deter people
from entering fields they might otherwise wish to pursue. In effect, excessive licensing
acts as a state-created barrier for people seeking work.
These dynamics often are not lost on the current, licensed workers in a particular
field. Indeed, licensed workers often are strong proponents of licensing precisely because
being licensed directly benefits them economically. After all, licensing restricts the
number of potential competitors they may face, which may enable them to charge higher
prices. For this reason, policymakers should be skeptical of claims that licensing is
necessary to protect the public from some perceived ill, especially when looking beyond
the small subset of occupations where licensing has a clearly identified and appropriately
grounded public policy rationale.
FTC staff supports the Nebraska legislature’s ongoing efforts to review and,
where possible, streamline the state’s many licensure requirements. This reform initiative
has the potential to deliver significant benefits to Nebraskans, including Nebraskans
looking for new or better work within the state, as well as Nebraska consumers generally.
In this comment, we suggest a general framework for evaluating the competitive
effects of legislative proposals to modify Nebraska’s various occupational licensing
regimes. Although we do not comment specifically on each of the four legislative
proposals, the goal of the framework is to aid legislators, regulators, and other
policymakers in identifying those options that impose the fewest possible restrictions on
competition, consistent with public health, safety, and other legitimate policy goals. In
many situations, as current bills appear to recognize, it may be possible to eliminate
licensure requirements entirely.

8
to achieve the specific public policy purpose, or is there a less intrusive way to
achieve the public policy objective?
When the public benefits are slight or highly speculative, occupational licensing
may not be desirable in any form. Similarly, a specific regulation that imposes non-trivial
impediments to competition may not be justified. Even when particular regulatory
restrictions address well-founded consumer protection or other concerns, the inquiry
should not end there. If the restrictions are also likely to harm competition, we believe
that policymakers should consider whether the regulations could be more narrowly
tailored to minimize the burden on competition while still achieving other legitimate
policy goals. For example, a state could adopt a certification system in lieu of licensing,
which could allow consumers to choose between a certified, but potentially higher-priced
professional, and a lower-priced, noncertified professional.29
IV. 	Conclusion
We commend Governor Ricketts and Nebraska’s legislators for examining state
occupational licensing laws to determine whether such laws, on balance, help or harm
Nebraska citizens. State regulation of occupations can serve important public policy goals
and, when used appropriately, protect the public from harm. But, as illustrated by
economic studies and the Commission’s lengthy prior history and experience,
occupational licensing can also make consumers worse off. Licensing can limit
occupational opportunities and impede competition without offering meaningful
protection from even substantiated risks. For these reasons, we encourage the Nebraska
legislature to consider the likely procompetitive benefits of reducing or (where
appropriate) eliminating occupational licensing requirements, consistent with legitimate
policy concerns.
We appreciate this opportunity to present our views.
29 See, e.g., COX & FOSTER , supra note 12, at viii-ix. Moreover, there are additional mechanisms to protect
consumers that are arguably less restrictive than either licensing or certification, including professional
registries, mandatory disclosure requirements, and third party provision of quality information. Id. at 49-51.

9
Respectfully submitted,
Tara Isa Koslov, Acting Director
Office of Policy Planning
Ginger Jin, Director
Bureau of Economics
Tad Lipsky, Acting Director
Bureau of Competition

Office of Policy Planning
Bureau of Competition
Bureau of Economics
March 15, 2017
Hon. Senator Brett Lindstrom
District 18
State Capitol
P.O. Box 94604
Lincoln, Nebraska 68509-4604
Dear Senator Lindstrom:
We welcome the opportunity to share our views regarding a number of proposed
bills that would loosen or eliminate certain occupational licensing requirements in
Nebraska.1
In the 1950s, less than five percent of jobs in the United States required a license.2
Estimates today place that figure between 25 and 30 percent nationally.3 Nebraska falls
roughly in line with the national estimates: nearly 25 percent of Nebraska’s workforce
holds one of about 200 occupational licenses.4 In our view, the substantial expansion of
occupational licensing—in Nebraska and nationally—may likely be unnecessary and can
be harmful to consumers and competition.
We recognize that occupational licensing can be beneficial in specific areas,
typically when citizens would be at risk of considerable harm if services were provided
by unqualified professionals. For example, doctors are licensed, in large part, because it
1 This letter expresses the views of the FTC’s Office of Policy Planning, Bureau of Competition, and
Bureau of Economics. The letter does not necessarily represent the views of the FTC or any individual
Commissioner. The Commission, however, has voted to authorize staff to submit this comment.
2 See M ORRIS M. K LEINER , T HE H AMILTON P ROJECT, REFORMING O CCUPATIONAL L ICENSING B OARDS 5
(2015), http://brook.gs/1ZARuJ2.
3 See id.; Morris M. Kleiner & Alan B. Krueger, Analyzing the Extent and Influence of Occupational
Licensing on the Labor Market, 31 J. LAB . E CON. 173 (2013); Morris M. Kleiner & Alan B. Krueger, The
Prevalence and Effects of Occupational Licensing, 48 BRIT J. I NDUS. REL. 2 (2010).
4 Press Release, Office of Governor Pete Ricketts, Gov. Ricketts, Senators Unveil Occupational Licensing
Reforms (Jan. 10, 2017), https://governor.nebraska.gov/press/gov-ricketts-senators-unveil-occupational-
licensing-reforms. See also K LEINER , supra note 2, at 9.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

2
is too difficult for patients to evaluate the doctor’s training and skills. There is what an
economist would call a large “information asymmetry” between the patient and the
doctor and an unqualified doctor might do great harm to the public. In light of these
concerns, the state uses licensing to ensure the doctor achieves and sustains a minimum
level of competence.
Unlike physician licensing, occupational licensing in many other occupations
does not provide clear public benefits. For example, some states require interior
decorators to get a special license from the state. The state requires a license for this
occupation even though the normal operation of market forces already fully and reliably
protects the public from harm. If interior decorators are not good at their jobs, people will
simply refuse to buy their services. There is no discernable risk to the public from
allowing an incompetent interior decorator to fail, and the public can easily evaluate the
merits of interior decorators without any special assistance from the government.
The simple fact is that many more occupations resemble the interior decorator
example than the medical doctor example. Yet many occupations often are subject to
licensing requirements that are unmoored from legitimate health, safety, or similar public
policy objectives. Unnecessary licensing imposes compliance costs on anyone wishing to
enter a licensed occupation. Even modest licensing requirements can and do deter people
from entering fields they might otherwise wish to pursue. In effect, excessive licensing
acts as a state-created barrier for people seeking work.
These dynamics often are not lost on the current, licensed workers in a particular
field. Indeed, licensed workers often are strong proponents of licensing precisely because
being licensed directly benefits them economically. After all, licensing restricts the
number of potential competitors they may face, which may enable them to charge higher
prices. For this reason, policymakers should be skeptical of claims that licensing is
necessary to protect the public from some perceived ill, especially when looking beyond
the small subset of occupations where licensing has a clearly identified and appropriately
grounded public policy rationale.
FTC staff supports the Nebraska legislature’s ongoing efforts to review and,
where possible, streamline the state’s many licensure requirements. This reform initiative
has the potential to deliver significant benefits to Nebraskans, including Nebraskans
looking for new or better work within the state, as well as Nebraska consumers generally.
In this comment, we suggest a general framework for evaluating the competitive
effects of legislative proposals to modify Nebraska’s various occupational licensing
regimes. Although we do not comment specifically on each of the four legislative
proposals, the goal of the framework is to aid legislators, regulators, and other
policymakers in identifying those options that impose the fewest possible restrictions on
competition, consistent with public health, safety, and other legitimate policy goals. In
many situations, as current bills appear to recognize, it may be possible to eliminate
licensure requirements entirely.

8
to achieve the specific public policy purpose, or is there a less intrusive way to
achieve the public policy objective?
When the public benefits are slight or highly speculative, occupational licensing
may not be desirable in any form. Similarly, a specific regulation that imposes non-trivial
impediments to competition may not be justified. Even when particular regulatory
restrictions address well-founded consumer protection or other concerns, the inquiry
should not end there. If the restrictions are also likely to harm competition, we believe
that policymakers should consider whether the regulations could be more narrowly
tailored to minimize the burden on competition while still achieving other legitimate
policy goals. For example, a state could adopt a certification system in lieu of licensing,
which could allow consumers to choose between a certified, but potentially higher-priced
professional, and a lower-priced, noncertified professional.29
IV. 	Conclusion
We commend Governor Ricketts and Nebraska’s legislators for examining state
occupational licensing laws to determine whether such laws, on balance, help or harm
Nebraska citizens. State regulation of occupations can serve important public policy goals
and, when used appropriately, protect the public from harm. But, as illustrated by
economic studies and the Commission’s lengthy prior history and experience,
occupational licensing can also make consumers worse off. Licensing can limit
occupational opportunities and impede competition without offering meaningful
protection from even substantiated risks. For these reasons, we encourage the Nebraska
legislature to consider the likely procompetitive benefits of reducing or (where
appropriate) eliminating occupational licensing requirements, consistent with legitimate
policy concerns.
We appreciate this opportunity to present our views.
29 See, e.g., COX & FOSTER , supra note 12, at viii-ix. Moreover, there are additional mechanisms to protect
consumers that are arguably less restrictive than either licensing or certification, including professional
registries, mandatory disclosure requirements, and third party provision of quality information. Id. at 49-51.

9
Respectfully submitted,
Tara Isa Koslov, Acting Director
Office of Policy Planning
Ginger Jin, Director
Bureau of Economics
Tad Lipsky, Acting Director
Bureau of Competition

Office of Policy Planning
Bureau of Competition
Bureau of Economics
March 15, 2017
Hon. Senator John Lowe
District 37
State Capitol
P.O. Box 94604
Lincoln, Nebraska 68509-4604
Dear Senator Lowe:
We welcome the opportunity to share our views regarding a number of proposed
bills that would loosen or eliminate certain occupational licensing requirements in
Nebraska.1
In the 1950s, less than five percent of jobs in the United States required a license.2
Estimates today place that figure between 25 and 30 percent nationally.3 Nebraska falls
roughly in line with the national estimates: nearly 25 percent of Nebraska’s workforce
holds one of about 200 occupational licenses.4 In our view, the substantial expansion of
occupational licensing—in Nebraska and nationally—may likely be unnecessary and can
be harmful to consumers and competition.
We recognize that occupational licensing can be beneficial in specific areas,
typically when citizens would be at risk of considerable harm if services were provided
by unqualified professionals. For example, doctors are licensed, in large part, because it
1 This letter expresses the views of the FTC’s Office of Policy Planning, Bureau of Competition, and
Bureau of Economics. The letter does not necessarily represent the views of the FTC or any individual
Commissioner. The Commission, however, has voted to authorize staff to submit this comment.
2 See M ORRIS M. K LEINER , T HE H AMILTON P ROJECT, REFORMING O CCUPATIONAL L ICENSING B OARDS 5
(2015), http://brook.gs/1ZARuJ2.
3 See id.; Morris M. Kleiner & Alan B. Krueger, Analyzing the Extent and Influence of Occupational
Licensing on the Labor Market, 31 J. LAB . E CON. 173 (2013); Morris M. Kleiner & Alan B. Krueger, The
Prevalence and Effects of Occupational Licensing, 48 BRIT J. I NDUS. REL. 2 (2010).
4 Press Release, Office of Governor Pete Ricketts, Gov. Ricketts, Senators Unveil Occupational Licensing
Reforms (Jan. 10, 2017), https://governor.nebraska.gov/press/gov-ricketts-senators-unveil-occupational-
licensing-reforms. See also K LEINER , supra note 2, at 9.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

2
is too difficult for patients to evaluate the doctor’s training and skills. There is what an
economist would call a large “information asymmetry” between the patient and the
doctor and an unqualified doctor might do great harm to the public. In light of these
concerns, the state uses licensing to ensure the doctor achieves and sustains a minimum
level of competence.
Unlike physician licensing, occupational licensing in many other occupations
does not provide clear public benefits. For example, some states require interior
decorators to get a special license from the state. The state requires a license for this
occupation even though the normal operation of market forces already fully and reliably
protects the public from harm. If interior decorators are not good at their jobs, people will
simply refuse to buy their services. There is no discernable risk to the public from
allowing an incompetent interior decorator to fail, and the public can easily evaluate the
merits of interior decorators without any special assistance from the government.
The simple fact is that many more occupations resemble the interior decorator
example than the medical doctor example. Yet many occupations often are subject to
licensing requirements that are unmoored from legitimate health, safety, or similar public
policy objectives. Unnecessary licensing imposes compliance costs on anyone wishing to
enter a licensed occupation. Even modest licensing requirements can and do deter people
from entering fields they might otherwise wish to pursue. In effect, excessive licensing
acts as a state-created barrier for people seeking work.
These dynamics often are not lost on the current, licensed workers in a particular
field. Indeed, licensed workers often are strong proponents of licensing precisely because
being licensed directly benefits them economically. After all, licensing restricts the
number of potential competitors they may face, which may enable them to charge higher
prices. For this reason, policymakers should be skeptical of claims that licensing is
necessary to protect the public from some perceived ill, especially when looking beyond
the small subset of occupations where licensing has a clearly identified and appropriately
grounded public policy rationale.
FTC staff supports the Nebraska legislature’s ongoing efforts to review and,
where possible, streamline the state’s many licensure requirements. This reform initiative
has the potential to deliver significant benefits to Nebraskans, including Nebraskans
looking for new or better work within the state, as well as Nebraska consumers generally.
In this comment, we suggest a general framework for evaluating the competitive
effects of legislative proposals to modify Nebraska’s various occupational licensing
regimes. Although we do not comment specifically on each of the four legislative
proposals, the goal of the framework is to aid legislators, regulators, and other
policymakers in identifying those options that impose the fewest possible restrictions on
competition, consistent with public health, safety, and other legitimate policy goals. In
many situations, as current bills appear to recognize, it may be possible to eliminate
licensure requirements entirely.

8
to achieve the specific public policy purpose, or is there a less intrusive way to
achieve the public policy objective?
When the public benefits are slight or highly speculative, occupational licensing
may not be desirable in any form. Similarly, a specific regulation that imposes non-trivial
impediments to competition may not be justified. Even when particular regulatory
restrictions address well-founded consumer protection or other concerns, the inquiry
should not end there. If the restrictions are also likely to harm competition, we believe
that policymakers should consider whether the regulations could be more narrowly
tailored to minimize the burden on competition while still achieving other legitimate
policy goals. For example, a state could adopt a certification system in lieu of licensing,
which could allow consumers to choose between a certified, but potentially higher-priced
professional, and a lower-priced, noncertified professional.29
IV. 	Conclusion
We commend Governor Ricketts and Nebraska’s legislators for examining state
occupational licensing laws to determine whether such laws, on balance, help or harm
Nebraska citizens. State regulation of occupations can serve important public policy goals
and, when used appropriately, protect the public from harm. But, as illustrated by
economic studies and the Commission’s lengthy prior history and experience,
occupational licensing can also make consumers worse off. Licensing can limit
occupational opportunities and impede competition without offering meaningful
protection from even substantiated risks. For these reasons, we encourage the Nebraska
legislature to consider the likely procompetitive benefits of reducing or (where
appropriate) eliminating occupational licensing requirements, consistent with legitimate
policy concerns.
We appreciate this opportunity to present our views.
29 See, e.g., COX & FOSTER , supra note 12, at viii-ix. Moreover, there are additional mechanisms to protect
consumers that are arguably less restrictive than either licensing or certification, including professional
registries, mandatory disclosure requirements, and third party provision of quality information. Id. at 49-51.

9
Respectfully submitted,
Tara Isa Koslov, Acting Director
Office of Policy Planning
Ginger Jin, Director
Bureau of Economics
Tad Lipsky, Acting Director
Bureau of Competition

FTC Staff Comments To the Nebraska State Senate Regarding A Number of Proposed Senate Bills That Would Loosen or Eliminate Certain Occupational Licensing Requirements In Nebraska

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