I have written on this subject in the past (Locke, Reference Locke2009; Locke, Mode, & Binswanger, Reference Locke, Mode and Binswanger1980), but here I will both reiterate and expand on what I have said before.

Occupational licensing prohibits voluntary exchanges between consenting adults regarding services. Such services can only be provided by the permission of the government; the provider has to obtain a license to practice. Occupational licensing laws have been increasing steadily for several decades (LCIOP Joint Task Force, 2017), and some have faced legal challenges (more on this below). The push for licensing laws has not come from purchasers but from providers, starting with medical doctors early in the last century (Locke et al., Reference Locke, Mode and Binswanger1980).

What justification is given for this? It is allegedly to “protect the public,” that is, to “protect the public from harm.” These quotes are thrown about like magical incantations requiring no explanation or definition. Harm is a complex subject in the law, but let us consider some obvious examples.

Under the law, protection against harm obviously includes (a) the prohibition of the use of physical force or the threat of force, such as assault or taking your money at gunpoint; (b) the prohibition against fraud, such as claiming you have specific expertise or training when you do not (i.e., misrepresentation); and (c) breach of contract, such as failing to fulfill the terms of a contract (e.g., taking your money and not doing what was agreed upon). The various laws include both criminal law and civil law, and the concepts are based on centuries of legal precedent involving thousands of pages of rules and regulations. The common element here involves the protection of individual rights. There is also a newer category of the law pertaining to psychological injury; this topic is very complex and controversial (see Wikipedia), and a coherent discussion of it is beyond the scope of this commentary.

Now consider the case of a business that hires an industrial and organizational (I-O) psychologist. The hiring company cannot legally beat you up, write a contract in disappearing ink, or fail to pay you for the services you provided (if you provide them). Contractual disputes can be taken to arbitration or to court.

What harm, then, can you as a consultant do that is not already covered under existing law? If you are dishonest or incompetent, the clients can terminate the contract. If you commit a crime, they can have you arrested. You can initiate a lawsuit. No one can guarantee a perfect outcome, in any field or profession, for a contract or service in advance.

Competence can never be guaranteed, and certainly not by anything as simple-minded as you getting a license based on taking some courses or even having a mentor. Who will license the mentor? Who will protect you from incompetent licensing boards? This idea is especially ridiculous given that the population of managerial consultants may have scores of different skills developed in scores of different organizations. If someone wants to hire you, his or her best bet is to find out your reputation by talking to other people whom you have worked for doing similar tasks.

It should be noted that the same principle holds with respect to psychotherapists. Although cognitive behavioral therapy (CBT) may be the dominant paradigm now, it is not the only method of therapy that can help people. Worse, psychologists cannot even agree on what the best outcome for therapy is. Clients come to therapy with many different goals, and therapists differ widely in their ability to achieve desired outcomes. The requirement that therapists have hundreds or thousands of hours of mentoring before they can be licensed is arbitrary. How could this guarantee competence? Therapists are as different as snowflakes; there are over 100 theories of psychotherapy, and every therapist applies his or her model in his or her own way.

But it gets worse. The American Psychological Association (APA) has never done a study comparing the “outcomes” achieved by licensed and nonlicensed people who do what could be called “therapy.” I know because I have asked them. (I served on the APA Council of Representatives.) Their claim of protecting the public has no factual basis at all. I am willing to bet that the same holds true for all licensed professions.

The “protect the public” claim is a transparent rationalization. What then has to be the real motive or motives behind occupational licensing? I think two motives are obvious:

1. 1. Status seeking: People believe that having a license makes them de facto superior to those with no license. It is a way for them to feel special with their status enforced by law—but not based on performance in the profession. This is nothing but elitism enforced by coercion.

2. 2. The expectation of financial gain by limiting the number of competitors and possibly having pricing power. This does not mean that the licensed practitioners will necessarily make more money than they would otherwise, but they may believe they will.

Consider how the public is actually harmed by licensing. If the licensing standards are set low (by whatever standard is used), more people can do the work, and there is presumably more competition, thus holding prices down. If the licensing standards are set high, fewer people can do the work and prices would most likely be higher. But here is the issue: What gives the government the right to decide an issue like this? Any such decision, such as setting minimum standards at level X, would have to be arbitrary. It would prevent people from making their own choices. As noted, there is no evidence that licensed people (whatever the standards) are better than unlicensed people at anything.

The belief that professions should be licensed by the government is so divorced from reason, morality, and reality that one has to wonder if there is a deeper cause at work. I believe so; it is statism—the doctrine that the state should control as many aspects of our lives as possible. This, the state claims, is for our own good.

For people who want to feel reassured, is there an alternative to government licensing? There is: private licensing regulated by professionals—and there could be more than one private agency. Agencies could vie for reputation among themselves. But the important point here is that people who do not choose to be privately licensed would still be free to practice. Government coercion would be eliminated. Private customers could check out various agencies if they wanted to. Health insurance companies, if left free, could favor certain private agencies or none, as they saw fit when setting up mental health plans. (There is an IRS issue here, which I will not get into.)

What then should the I-O psychology profession do? The licensure discussion paper seems to have as its theme: There are many diverging opinions about licensing, but it seems to be a coming trend, so maybe we should get on board through collaboration. After all, even the White House has gotten in on the act (The White House, 2015) as noted.

Not so fast: First, occupational licensing, because of its coercive nature, is arbitrary by nature and a violation of rights. A “model” licensing act is a contradiction in terms. Second, it is being increasingly challenged in the courts. A nonprofit organization, the Institute for Justice, has taken on many such cases and has often won. It has won licensing cases relating to tour guides, African-style hair braiders, eyebrow threaders, casket sellers, book sellers, animal massagers, and a family psychologist over the use of the term “psychologist.” They also did a study showing there was no difference in competence between licensed and unlicensed florists. All these cases were at the state level.

I suggest we try to get an I-O psychology test case in some state, ask the state to enforce the law, and then appeal. I think we would win. I am sure APA would write an amicus against us, but I think it mainly wants to protect therapists from competition. Of course, APA is very well connected in Washington, DC, and savors its political connections. But this does not give it the right to prevent freedom of contract. (For a discussion of the moral basis of capitalism, see Rand, Reference Rand and Rand1967).

Dana Berliner, the litigation director at Institute for Justice, has suggested an alternative to or a precursor to a test case. She recommends doing our own study of licensed versus unlicensed I-O psychology consultants. Evidently courts find such studies relevant. This would be a substantial undertaking, but the results would be a strong basis for any court cases to follow.