Often, the worst examples of government intrusion occur when no one is looking. For “rent seekers” — those who seek personal economic benefits through government intervention — their selected issue is often of little interest to the public. But this should not be confused with a lack of importance.
Measures to impose severe licensing restrictions on heating and air conditioning work (HVAC) in homes are now moving through both St. Louis County and city governments. A decade ago, when these restrictive licensing rules were first passed in the county, they only applied to commercial work. There has been no rash of explosions and deaths stemming from unlicensed work in homes, so one might suspect that some HVAC practitioners have invented public safety concerns as an excuse to limit competition through legislation.
More than 50 years ago, economist Simon Rottenberg made a few projections about licensing laws: 1) requests for licensing will always come from current practitioners of the trade, not from the public; 2) licensing standards will be established by boards of people within the occupation, who have a vested interest in restricting their own competition; and, 3) when licensing is instituted, current practitioners will be grandfathered in and future entrants into the trade will seek their own benefit by attempting to impose newer and tighter requirements for those who come after them.
These projections are perfectly applicable to the proposals now under consideration. Let me be clear: The HVAC industry is the only party pushing for this legislation. Furthermore, the standards boards are made up of people who will benefit economically from limiting HVAC competition.
A letter in support of HVAC licensing from the head of the county’s Board of Examiners for Mechanical Licensing confronts critics head on, stating that there is “absolutely no evidence” that the county’s current licensing code has restricted competition and increased prices. He is correct that there has been no precise study of county HVAC licensing, but there are certainly studies documenting the harmful effects of restrictive licensing elsewhere. A 1978 California study found that dentists’ incomes and dental prices were 12 to 15 percent higher in states with more restrictive dental licensing. Perhaps the most famous study in this field determined that jurisdictions with more restrictive licensing of electricians had higher rates of electrocution.
The reason is straightforward: Restrictive licensing leads to higher prices, higher prices leads to more do-it-yourself electrical work, and that leads to more accidents — sometimes with fatal consequences. Other studies have also observed economic harms.
Nobody disputes the demanding, technical nature of HVAC work. Few people are handy enough to perform their own. So, licensing that increases prices by limiting supply will not significantly effect demand. If your mid-winter heating fails, you will hire someone to repair it no matter the cost. It is exactly that lack of alternatives that gives the industry pricing power.
There is no legitimate safety imperative for HVAC licensing in Saint Louis. Expanding the rules to include residential work serves no purpose other than increasing the profits and limiting the competition of current practitioners. When government coercion favors one business group over another, the rest of us lose.
David Stokes is a policy analyst with the Show-Me Institute, a Missouri-based think tank.