Dive Brief:
- Federal, state and local governments mandate licensing for some low- to medium-income occupations, but the effectiveness of such requirements is questionable, public policy organization Foundation for Government Accountability (FGA) argues in a new paper.
- Employees in many fields typically acquire licenses after passing an exam, completing an educational program or paying a fee. Licensing is normally required for occupations like law and medicine, but some states require licenses for other vocations like florist and interior designer, FGA said. In the 1950s, 5% of U.S. workers required licenses, according to research from The Brookings Institution and the U.S. Department of the Treasury cited by FGA, but by 2015, that percentage rose to 30%, resulting in more than 1,000 occupations requiring licensing at the state level alone.
- Officials in favor of licensing argue it benefits public safety, but FGA cites research showing such policies can increase costs and decrease the availability of professionals; a shortage of electricians in one case study increased the risk of accidental deaths caused by electrocution, for example. The paper argues licensing can compromise service quality, citing a research study that found 63% of a sample of studies on the effectiveness of licenses indicated an unclear, mixed or neutral effect on quality. Licenses can also make covered occupations cost-prohibitive for low-income individuals, FGA said.
Dive Insight:
FGA's arguments resonate in a labor market where employers are lifting educational and skills requirements to fill thousands of positions. The debate isn't new, having existed for years in the minds of businesses concerned that candidates may feel prohibited from taking on certain occupations.
But those in favor of licensing regulations have voiced concerns, aside from those of safety and quality, about the alternatives to mandated licensing — namely certification. Advocates are worried about members of the public being deceived by false certification programs, a Cornell University professor said in a 2015 report by The Pew Charitable Trusts.
The U.S. Department of Labor announced in April the availability of $7.5 million in grants to reform occupational licensing. The funds are available to states, post-secondary institutions and other entities to eliminate what Secretary of Labor Alexander Acosta called excessive licensing that raises the cost of entering an occupation for many workers. He advocated getting rid of unnecessary licensing and streamlining crucial licensing for occupations in health or safety.
"With record-low unemployment and millions of available jobs across the country, now is the opportune time to unleash the freedom to work," Jared Meyer, senior fellow at FGA, said in an emailed statement. "Lawmakers have an unprecedented opportunity to reform unnecessary and burdensome regulations that prevent people from finding jobs — while also protecting public safety and ensuring quality control."
The Trump administration has targeted licensing as part of its mission to roll back business regulations. However, support for licensing reform had also been voiced by the Obama administration, which in a 2015 document, described excessive licensing as costly and out of sync with today's required job skills.
