Feds Closing In On Licensing Boards

An alert reader pointed out an article by Eric Boehm today, New FTC Task Force Will Put Licensing Boards On Notice, where he describes the new Economic Liberty Task Force of the Federal Trade Commission. The Task Force is focused solely on the illegal persecution of exempt practitioners by state licensing boards, with a dual role of:

  • Advising state licensing boards of the limits the federal government imposes on their power.
  • Taking legal action against many boards that insist on violating federal law.

All this came about when, once again, the Federal Trade Commission’s powers were affirmed in the courts, this time by the Supreme Court (FTC v. North Carolina Board of Dental Examiners, 2014).

Why a Task Force?

In that decision, the Supreme Court reiterated in extremely clear language that state licensing boards aren’t allowed to hassle anyone except their own licensees. There are a couple of exceptions, but they require that the state law governing the boards be structured in a particular way—which it generally isn’t. (It certainly isn’t in Oregon.)

The issue here is that licensing boards inherently use monopolistic powers to restrain trade. The more trade is restrained, the more the remaining practitioners can jack up their prices. And who makes up the majority of a licensing board? Licensees! No wonder the requirements for getting a license are constantly increasing. Not because it makes the new licensees better, but to make them fewer.

And if practitioners from related professions can also be put out of business, that also means more money. Do boards really do this? Yes. Constantly.

The result? Income inequality. That’s the whole point, really. The boards enrich the “haves” at the expense of the “have-nots.” And it’s growing like a cancer. In the 1950s, fewer than five percent of jobs required a license. Now it’s 25-30%. People without a license are becoming an underclass.

A 2011 study using standard economic models estimated that restrictions from occupational licensing resulted in up to 2.85 million fewer jobs with an annual cost to consumers of $203 billion.
—Maureen Ohlhausen, Federal Trade Commission, Feb 23, 2017

Why a task force? After all, now that the Supreme Court has spoken, you’d think the boards would are moving briskly into compliance, right? After all, the writing was on the wall, in great big letters. But it hasn’t worked out that way.

For example, long after this decision came down, three Oregon licensing boards got together and decided to pretend it hadn’t happened. Instead, they came up with a bill, (HB2361, now before the House Health Care Committee) to eliminate Oregon’s “educational exemption” for counseling. If passed, the Oregon Board of Licensed Professional Counselors and Therapists will move from being in compliance with Federal law to being in violation of it!

The three boards were the Psychology Board (OBPE) which acted as ringleader, the Counseling Board (OBLPCT), which the psychologists set up as the fall guy, and the Clinical Social Workers’ Board (OBLSW), which avoided an assigned role.

So the FTC has little choice but to set up a task force. The situation demands a combination of remedial education and punishment. The FTC is prepared to explain the law, very slowly and carefully, using small words, to any board that will listen. And prosecute the ones that won’t.

Who’s Next With the FTC?

Most states have boards that are messed up, but Oregon is special. Not only is Oregon’s level of prosecution of exempt practitioners unprecedented, but HB2361 is so flagrantly illegal that it amounts to a challenge: the Counseling Board is daring the FTC to do something about it.  I await developments with interest!

And since violations of the federal laws against monopolistic practices can carry prison terms as well as fines, I suggest that the boards and their employees take these matters very seriously.

What’s Next With the State?

With any luck, the Oregon State Legislature will kill HB2361, allowing the Counseling Board to dodge a bullet. I recommend you get in touch with your state representative and encourage this.

I’ve found the vast majority of state senators and representatives (and their staffs) to be good listeners, thoughtful and intelligent, and with a quick grasp of issues.

More on the Economic Liberty Task Force

 

 

2 thoughts on “Feds Closing In On Licensing Boards

  1. Excellent essay re: state licensing boards. I wasn’t familiar with the situation in Oregon, but during my years with the Washington state Department of Licensing I watched with fascination and dismay the machinations of some boards to restrict competition. Then there are the other occasions when more, not less, regulation is indicated.

    1. Ben, thanks for writing!

      The whole licensing board thing started because no one in the state legislatures cared. “Who cares what a bunch of psychologists do to each other?” So if the psychologists want to set rules that make the lives of other licensed psychologists not worth living, they’re hurting no one but themselves. So a lot of laxness is built right into the system, because the state legislators consider licensing boards to be fundamentally second-rate and kinda fake. That’s why board prosecutions aren’t granted access to a real courtroom or a real judge, either. It’s all “Administrative Law,” as opposed to real law.

      I don’t know if more regulation is needed. These boards go out of their way to violate federal law already! I just wish the FTC would go for the gold. In Oregon, if a state employee or board member is prosecuted for practically anything, the state pays for their defense and pays their fine when they’re found guilty. But the various anti-trust laws also carry prison sentences. They’re not often invoked, but they can be if the gloves come off. And I don’t think the state can serve a board member’s jail time for him!

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