Regular readers know that many of the burdens of what we call the blue social model fall most heavily on young people. Untenable state pension obligations reward retirees while driving up taxes and hollowing out services for younger workers; urban land use regulations are making it increasingly difficult for millennials to get a foothold in the real estate market; our heavily subsidized and regulated higher education system is failing to deliver skills to many students at a reasonable cost; and the $15 minimum movement poses an existential threat to teen employment.
So it’s not surprising to see data showing that another pillar of blue model labor economics—onerous occupational licensing rules—also hit youth hardest. FiveThirtyEight’s Ben Casselman reports:
Licensing rules are a particular problem for young workers trying to break into the job market, especially those without a college degree. The unemployment rate for adults ages 18 to 35 with neither a license nor a college degree was 9.9 percent in 2015; for those with a license (but still no degree), it was 5.2 percent. Those who do manage to find full-time jobs earn 13 percent less than those with a license… Licensing rules don’t explain all or even most of that gap — there are likely other differences between people who have licenses and those who don’t — but they probably do play a role. The earnings gap shrinks, but doesn’t disappear, after controlling for education, occupation and other factors.
The ultimate function of blue model-style regulation is to manage the economy by protecting organized interests—whether they are public sector unions, politically connected real estate owners, the higher education cartel, or, in the case of occupational licensing, professional guilds—from competition and disruption. Because young people are less well-off, less established in their careers, and less likely to have an inside track to city councils and state legislatures, rules designed to limit competition and protect insiders naturally put them at a disadvantage.
Neither party really speaks to this issue. Republicans, who rely overwhelmingly on older, whiter voters, tend to be less concerned about protecting markets when markets don’t serve the interests of that constituency. Meanwhile, Democrats tend to promise young people a massive expansion of blue model cronyism that would make the problem worse. There is a huge untapped demand for politicians who take the economic obstacles facing young people seriously, and who offer real solutions.