Is Economic Exclusion a Legitimate State Interest? Four Recent Cases Test the Boundaries
41 Pages Posted: 4 Sep 2005
Date Written: August 18, 2005
For most people, economic opportunity defines "the American Dream." Yet many legal barriers interfere with the right to earn a living. Although these regulations are promulgated in the name of public safety and welfare, they often protect, not the public, but the private interest of established firms seeking to prevent competition from entrepreneurs. Occupational licensing laws, for example, sometimes accomplish no public safety objective, but merely prevent competition within a trade. Under the rational basis test, courts have on rare occasions, struck down such laws. For example, in Schware v. Bd. of Examiners, the Supreme Court held that under the Due Process Clause, occupational licensing requirements must have some "rational connection with the applicant's fitness or capacity to practice" the profession. This is consistent with the Court's repeated holding that the Due Process and Equal Protection Clauses require laws to have some public justification, rather than being based on mere animus, or the desire to benefit a particular constituency.
In four recent cases, federal courts have been confronted with the issue of whether regulations designed for no other purpose than to protect political insiders from fair economic competition meet the standards of the Fourteenth Amendment. In Powers v. Harris, the Tenth Circuit upheld an occupational licensing requirement even while acknowledging that it was solely intended to protect established companies against competition, on the grounds that "intrastate economic protectionism constitutes a legitimate state interest." Shortly afterwards, in Sagana v. Tenorio, the Ninth Circuit upheld explicitly discriminatory labor laws on the grounds that protecting some laborers against competition from others is a legitimate state interest. Two recent trial court decisions explore these themes further by evaluating the constitutionality of occupational licensing laws that lack any serious public-regarding justification.
In this article, I use these four cases to explain why mere economic protectionism is not a legitimate state interest, and why courts must revive the Constitution's limits on government's ability to grant pure political favors to economic interest groups.
Keywords: Economic protectionism, right to earn a living, Fourteenth Amendment, Due Process Clause, Equal Protection Clause, Powers v. Harris, Sagana v. Tenorio, legitimate state interest
JEL Classification: J68, J58, K10, K31
Suggested Citation: Suggested Citation