Occupational Licensing Reform Finds Rare Bipartisan Consensus

Rep. Dave Brat / Getty
February 27, 2018

Rep. Dave Brat (R., Va.), a member of the conservative House Freedom Caucus, and Rep. Dwight Evans (D., Pa.), a community activist from Philadelphia, came to rare agreement Tuesday on a licensing issue impacting the American workforce.

The lawmakers, who are often diametrically opposed on policy, expressed agreement during a House Small Business Subcommittee on Economic Growth, Tax, and Capital Access hearing titled, "Occupational Hazards: How Excessive Licensing Hurts Small Business."

Listening to advocates, small business owners, trade association members, and economic experts, Evans and Brat expressed common sentiments that the current occupational licensing structure has created barriers to employment, hindered economic opportunity, and limited geographic mobility.

Occupational licensing laws are some of the most burdensome of regulations facing the labor force. The laws in effect serve as a permission slip from the government as to who can and cannot work in a particular profession. To receive licensure, individuals may be required to complete hundreds of hours of training and pay costly fees. Such regulations also extend to the requirements licensees must meet to sustain accreditation. Occupational licensure often disproportionately affects professions in the public health and safety fields, but regulations also apply to florists, interior decorators, barbers, and landscapers.

Research conducted by the Institute for Justice found that during the 1950s, only 1 in 20 Americans was required to possess an occupational license to be eligible to work in their profession of choice. Today, nearly one in four Americans are required to hold an occupational license to perform their jobs.

"While the origins of this have noble goals of protecting the safety and the well being of residents, we can think of instances where the requirements have proved burdensome and bear little resemblance to the function they were intended," Evans said.

Complicating matters is the fact that occupational licensing laws are exercised at the state and local level, with each jurisdiction setting the requirements for licensure and the professions covered. The varying requirements have been shown to limit geographic mobility, especially in the cases of small businesses and military spouses.

"While there are 1,100 occupations in the United States that are licensed in at least one state, only 60 require a license in all 50 states," Brat said. "This inconsistency hurts workers' mobility and, most importantly, small business."

Studies have shown that the lack of uniformity across states, and even across municipalities within states, is estimated to cost consumers over $200 billion annually in reduced choice and competition.

David Barnes, the policy director of Generation Opportunity, a political advocacy organization, said occupational licensing laws serve to protect entrenched interests and limit competition.

"Occupational licensing laws force millions of young, hard-working Americans–especially those in lower-paying fields–to ask the government for permission to work and pursue their dreams," Barnes said. "These laws primarily serve to protect entrenched interests and many of these costly requirements are simply unnecessary thanks to market resources like Google and Yelp that help young people determine a worker's level of quality, affordability, and safety."

Watch the hearing:

Published under: Economy , Regulation