Occupational Licensing: The Other Right to Work Issue

The ‘Right to Work’ issue led to my embrace of economic liberty. The notion that a union can force my membership as a condition of employment strikes me as entirely unfair. This issue became salient in the 2010’s as five states adopted these laws (Indiana, Michigan, Wisconsin, West Virginia, and Kentucky). Although the ‘Right to Work’ issue faded from the headlines a similar issue emerged, occupational licensing. 

For many occupations regulators place license requirements on particular jobs as preconditions to employment. A 2015 report from the Obama administration sums up the issue nicely, “When designed and implemented carefully, licensing can offer important health and safety protections to consumers, as well as benefits to workers. However, the current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job.” Sixty years ago only 5% of jobs required a license, now it’s 25%. When a licensing regime becomes onerous and arbitrary I believe it harms someone’s “Right to Work.”

Thankfully many states continue to rectify this issue with Arizona leading the way. In 2017 Arizona passed the Right to Earn a Living Act which clarifies the narrow grounds (public health, safety, or welfare concern) in which a regulatory agency can promulgate regulations which limits access to a profession. Also, it switches the burden of proof to the regulatory bodies with regards to defending regulations in court. In 2019 Arizona passed a law granting Universal License Recognition. This bill recognizes licenses granted out-of-state to new residents of Arizona. While these new Arizona residents still need to go through the licensing process, they are now protected from duplicative requirements like training which they already completed in their former state.

Since COVID-19 we have seen more states relax occupational licensing requirements. In 2020 Florida passed the Occupational Freedom and Opportunity Act, the state’s most ambitious occupational licensing reform to date. This bill granted universal license recognition to barbers and cosmologists, reduced requirements for many professions (landscapers, geologists, diet coaches, and many others), and removed commercial drivers license requirements for veterans who have similar training and experience. Covid also spurred an increase in states adopting Universal License Recognition. Previously mentioned Arizona and three other states enacted this law in 2018 and 2019. But in 2020 five new states (Colorado, Utah, Missouri, Iowa, and Idaho) passed this law.

Even deep blue states like Maryland joined the action. Their Republican Governor, Larry Hogan, announced in March 2022 a sweeping initiative to remove an unnoticed form of occupational licensing, the college credential. Governor Hogan created a new category of worker called Skilled Through Alternative Routes (STAR). STARs includes active labor force participants who are at least 25 years old with a high school diploma, but developed their skills outside the traditional 4 year college path, like community college, apprenticeship, boot camps, military service, and on-the-job training. Opportunity@Work, a workforce development non-profit based in Maryland, estimates that 70 million Americans (more than 40% of the entire labor force) can be described as STARs. The state of Maryland will intentionally recruit STARs and decrease the importance of the college credential.

One can look at occupational licensing similar to closed shop unions, trade barriers, and other forms of over-regulation. Each of the actions listed creates a small group of winners and a large group of losers. The small group winners want to keep the policy intact at the expense of the large group of losers. Removing the barriers to employment caused by over zealous occupational licensing may hurt some workers who benefit by shutting others out of the market. But that cost is absolutely worth the benefit of opening up the market, and the subsequent opportunity, to the throngs of people currently shut out. I must stress, no one (except for my beloved anarcho-libertarian friends) wants to eliminate all regulations. We merely want to move one step closer to the goal of equal opportunity.