Life, Limbs, and Licensing: Occupational Regulation, Wages, and Workplace Safety of Electricians, 1992-2007
Kleiner, Morris M., Park, Kyoung Won, Monthly Labor Review
Analysts of government policies in the labor market have long held that licensing laws which restrict the supply of labor cause an increase in wages, but there has been little analysis of the influence of regulation on the conditions of work. This article examines the influence of occupational licensing on the wages and workplace safety of electricians, one of the most regulated occupations directly involved in the construction industry.
Occupational licensing is among the fastest growing institutions in the U.S. economy. In the 1950s, about 4.5 percent of the workforce was licensed by state governments. By 2008 approximately 29 percent of the U.S. workforce was licensed by any level of government, and more than 800 occupations were licensed by at least one state in the 1990s. (1) The latter statistic compared with about 12.4 percent of the workforce who said they were union members in the Current Population Survey (CPS) for the same year. (2)
Occupational regulation in the United States generally takes three forms. The least restrictive form is registration, in which individuals file their names, addresses, and qualifications with a government agency before practicing their occupation. The registration process may include posting a bond or filing a fee. In contrast, certification allows any person to perform the relevant tasks, but the government-or sometimes a private, nonprofit agency-administers an examination or another method to determine qualifications and certifies those who have achieved the level of skill and knowledge required for certification. The toughest form of regulation is licensure, often referred to as "the right to practice." Under licensure laws, working in an occupation for compensation without first meeting government standards is illegal. As examples of certification versus licensure, travel agents and car mechanics are generally certified but not licensed.
The focus of this article is the role of occupational licensing and other forms of government regulation for electricians, a heavily regulated occupation in the construction industry. Unlike previous work that examines the role of occupational licensing on wages, prices, and access to, and quality of, regulated services for consumers, (3) the research presented here extends the analysis of regulation to the subject of the likelihood of occupational licensing reducing work-related deaths and serious job-related injuries.
The analysis presented finds that local licensing of electricians is associated with approximately a 12-percent wage premium beyond that afforded by state regulations and that certain aspects of occupational requirements of state licensing, such as age and education, as well as exam requirements, raise the wages of electricians by about 6 percent to 8 percent. These results are robust for several alternative specifications. Further, the findings suggest a modest tradeoff between wages and work-related injuries. However, no systematic influence of occupational licensing on the injury rates, severity of injuries, or death rates of electricians was found. The rest of the article documents the development of these results.
Public policy approaches to occupational health and safety
Public policies on health and safety have generally taken two approaches: the regulation and setting of standards, and the implementation of social insurance through worker compensation. Illustrations of the regulation approach are the passage of the Coal Mine Safety Act in 1969 and the Occupational Health and Safety Act in 1970.
The federal government has played a key role in protecting the health and safety of the workforce. For example, miners have been at the forefront of occupational health and safety legislation largely because they both have the highest rate of injuries and deaths and have gathered the most attention through the media, in part because many of the deaths and injuries involve large groups of miners who are affected at one time and often in a dramatic fashion. …