Here is a post from Brookings on occupational licensing (HT: Arnold Kling) with a striking graph from the White House report on Occupational Licensing (pdf):
As strident as I have become on the housing issue, I could believe that occupational licensing causes more economic stress than housing constraints. The second graph shows the growth in licensing requirements over time.
I think this issue actually intersects quite a bit with the housing issue. If you are cutting hair in San Jose, and the rent just got raised to 60% of your income, you've got to make a change. But, the problem is, your credentials only have value locally. The barber's license gave you some competitive advantage in California, but it's probably useless if you move to Iowa.
So, now, not only have you been pushed out of your home and your community, but the state has incentivized you into an occupation such that this dislocation will be especially painful.
Also, remember that fluctuations in homeownership have been highest among the younger age groups. They are also entering an economy that is more defined by credentialism, and their migration patterns, shown above, are affected most strongly. We really have been taking it to young adults.
I wonder if this is a partial explanation of the migration patterns we saw in the 2000s. State licenses will apply in Riverside. So, it might be worth spending 40% of your income on rent in Riverside, even if it means a 20% cut in income. And, there is some regional reciprocity in licenses, so maybe this means the move to Las Vegas or Phoenix is also valuable, even if the housing contagion is spreading to those cities. Those states would be much more valuable locations than a state where your license is worthless.
This affects countless sectors - health care, construction, education, personal services. And, the problem is more acute with two wage-earners.
There is a lot of discussion about the problem in Europe of having a monetary union where there are cultural limits to labor migration and significant differences in local governance and standards of living. I'm afraid we are moving in that direction without taking notice. These issues are largely local in nature. Pragmatically, this adds up to meaningful limits on interstate trade, but it has happened in a piecemeal sort of way. Death by a thousand cuts.