Occupational licensing has grown dramatically over the years, leading to a larger share of American workers who need a license to perform their work. Accounting for just 5 percent of the employed population in the 1950s, licensed workers now comprise nearly 25 percent of all employed Americans. Spurred by concerns for public safety, consumer protection or other policy goals, the growth in state licensing over time has created a patchwork of different requirements across states. This inconsistency makes it difficult for workers to move their skills across state lines and, because of varying fees for obtaining licenses, costly for them to work in a licensed profession.
“When designed and implemented carefully, licensing can benefit consumers through higher quality services and improved health and safety standards,” according to the 2015 “Occupational Licensing: Framework for Policymakers” report from the U.S. Council of Economic Advisers and departments of Labor and Treasury. The report noted, however, that current licensure rules impose burdens on workers, employers and consumers, and “too often are inconsistent, inefficient, and arbitrary.”
State policymakers play an important role in setting licensure policy and are at the heart of many efforts to strike the right balance needed to protect consumers and promote economic growth and employment opportunity.
As described in this report, policymakers are enacting a wide range of strategies to calibrate their regulations to meet the needs of today’s consumers, workers, employers and job markets. Occupational licensing research offers important lessons about the effects, costs and benefits of licensing policies, as well as best practices and tools for designing a smart regulatory approach.
Drawing from the vast body of occupational licensing research, this report provides an overview of occupational licensing trends and policy issues, summarizes best practices and recommendations for licensing policies, and highlights state legislative and executive actions that aim to protect consumers, foster employment growth and remove barriers to work.