Arlington, VA — State occupational licensing laws force more American workers than ever to get a government permission slip before getting a job—and these laws are often overly burdensome, irrational and arbitrary, according to a new national study. The study finds that most states impose heavy licensing burdens on lower-income workers.
The report, License to Work: A National Study of Burdens from Occupational Licensing (2nd ed.), released this week by the Institute for Justice (IJ), is the most comprehensive look to date at licensing barriers for lower-income workers and aspiring entrepreneurs. It details licensing requirements for 102 lower-income occupations across all 50 states and the District of Columbia, cataloging license requirements such as mandated education and training, fees, and exams. According to the report:
- The 102 occupational licenses require, on average, $267 in fees, one exam, and nearly a year of education and experience.
- Interior designer is the most difficult occupation to enter, though it is licensed by only three states and D.C.
- Louisiana and Washington license more of the occupations studied than any other state—77 of 102. Wyoming, with a mere 26, licenses the fewest. On average, states license 54 occupations.
- Hawaii imposes the steepest licensing requirements, averaged across the occupations it licenses, while Nebraska’s average requirements are the lightest.
- California licenses a large number of occupations and imposes steep requirements, making it the most widely and onerously licensed state. Wyoming is the least widely and onerously licensed state.
- Licensing barriers often make little sense: In most states, it takes 12 times longer to get a license to cut hair as a cosmetologist than to get a license to administer life-saving care as an emergency medical technician.
“Licensing laws force people to spend a lot of time and money earning a license instead of earning a living,” said Dick Carpenter, an IJ director of strategic research and co-author of the report. “They create roadblocks for workers hoping to break into new occupations, change careers or build new businesses.”
According to the report, these roadblocks are rife with inconsistencies and irrationalities that often undermine the case for licensing. For example, most of the 102 occupations are unlicensed somewhere, suggesting they can be safely practiced without a state license.
“Research provides scant evidence that licensing does what it is supposed to do—raise the quality of services and protect consumers,” said Lisa Knepper, an IJ director of strategic research and co-author of the report. “Instead, licensing limits competition, leading to higher prices and reduced access to jobs.”
Licensing reform is now being championed by a growing chorus of policymakers and scholars across the political spectrum. Lawmakers should start reform efforts by identifying and repealing needless licenses. If necessary, they can replace licensing with less restrictive alternatives, such as certification, bonding or insurance, inspections, and registration. These alternatives offer consumer protection without shutting people out of work.
“Occupational licensing is the most burdensome way to regulate work,” said Lee McGrath, IJ’s senior legislative counsel. “Before restricting the right to earn an honest living, lawmakers should demand substantial, empirical proof of widespread and significant harm, and then select the least restrictive regulation best targeted to address it.”
License to Work offers additional reform options that aim to stem the growth of licensing, rein in anticompetitive licensing boards and regulations, and curtail license denials based on irrelevant or long-past criminal records.
For more than 25 years, the Institute for Justice has been fighting for the right of entrepreneurs such as hair braiders, interior designers, and tour guides to earn a living without first getting a government-mandated license. These licenses are often created not by concerned citizens seeking safeguards against harmful businesses, but by “bottleneckers.” A new book by IJ’s Chip Mellor and Dick Carpenter, Bottleneckers: Gaming the Government for Power and Private Profit, describes a bottlenecker as a person who advocates for the creation or perpetuation of government regulation—particularly occupational licensing—to restrict entry into their occupation. In this way, the bottlenecker wins an economic advantage without providing any benefit to consumers. IJ is dedicated to removing bottlenecks by persuading judges and lawmakers to take entrepreneurs’ constitutional rights seriously.