Occupational licensing needs real reform

One-in-five Americans need to get a government license in order to do their jobs. While supporters often claim licensing is important for health and safety or critical to ensuring high-quality services are provided, such claims often fall apart under scrutiny. Occupational licensing rules are often imposed at the behest of existing professionals looking to restrict competition by imposing a barrier to entry, with little evidence such licensing is otherwise needed.

The Archbridge Institute has released a new report examining occupational licensing across America, ranking the states plus the District of Columbia according to the barriers imposed on workers and the extent of licensing requirements.

The report displays both the broad similarities and differences in how and whether states impose barriers or licensing requirements on different professions.

Every state and the District of Columbia, for example, require government-issued licenses for people who wish to work as attorneys, chiropractors, dentists and psychologists, for example.

But only eight states require government-issued licenses for drug counselors, 10 states require nutritionists to get a license, 24 states require tattoo artists to be licensed and 24 require car salesmen to be licensed.

The Archridge Institute notably ranked California 11th in the country for requiring the most licenses of the occupations they examined.

Underscoring the fact that this is not a partisan problem, the Institute ranked Arkansas, Texas, Alabama, Oklahoma and Washington State as those with the most barriers and licensing requirements in the country.

“California’s most uniquely licensed occupation is Fire/Life/Safety Technician, which is licensed only in California,” the report notes.

Past comparisons of the states have yielded even worse showings for California. The Institute for Justice’s “License to Work” series of reports, focused on low- and middle-income occupations, have generally ranked California in the top three most extensively licensed states in the country.  The Cato Institute’s occupational licensing rankings, based on a select set of occupations, have also placed California in the top two, behind Texas.

As both the Obama and Trump administrations acknowledged, occupational licensing can often be a barrier to entry which limits competition and raises costs for consumers without necessarily providing much in the way of benefits for public health, safety or even quality of service.

States must seriously evaluate whether licensing is necessary.

California does have periodic sunset reviews of its occupational licensing schemes, but they tend to be perfunctory and those most incentivized to speak up during such reviews are those who benefit from licensing. Namely, the professionals who are already licensed and the professional associations incentivized to protect the turf of its members.

This is not a partisan issue. This is a common sense issue. California needs to revisit occupational licensing.