Report shows special interests dominate licensing board nominations

Arlington, VA; November 10, 2022: A new report released today by Pacific Legal Foundation shows that in dozens of states, members of public licensing boards are effectively handpicked by interest groups, which have an incentive to use their regulatory power to keep out competition.

The report, “Choosing the Gatekeepers: How Special Interests Control Licensing Board Nominations,” illustrates the scope of the problem across 50 states for 17 occupations that are governed by licensing boards. Of those professions, 23 states effectively hand over the power of nominating a number of board spots to a trade association for at least one board.

“Established industry associations have incentives to keep licensing barriers high to keep out competition from new or innovative providers,” said Stephen Slivinski, a senior research fellow at Pacific Legal Foundation. “These industry members can easily outvote members of the public who also sit on the board, making them essentially powerless to counter insider interests.”

Summary:

• Industry associations control the majority of seats on most occupational licensing boards across the United States. These interest groups can easily outvote any public members on the board, who are essentially powerless to counter insider interests.
• In dozens of states, a number of seats on public licensing boards are effectively handpicked by private industry. In fact, state laws require the governor to choose board members only from a list created by the industry’s established professional association.
• This report, the first of its kind on the subject, shows that of 17 licensed occupations researched over 23 states, special-interest associations directly choose the pool of candidates for appointments to 96 public licensing boards. These associations have incentives to keep licensing barriers high in order to reduce competition from new or innovative providers.

Key findings:

• For people seeking a license in any of these 17 occupations, there are 96 specific instances across all 50 states in which the license would be issued and regulated by a board at least partly hand-picked by special interests.
• Trade associations most frequently direct the selection of private-sector board members for the following occupations: podiatrists (10 states), accountants (9 states), psychologists (9 states), dentists (8 states), nurses (8 states), and optometrists (8 states).
• The states with the largest number of occupations regulated by boards on which private-sector members are recommended by a trade association are Louisiana, Alabama, Mississippi, Kentucky, Oklahoma, Maryland, and North Carolina.

This report was written by Stephen Slivinski, deputy director of strategic research and a senior research fellow at Pacific Legal Foundation who specializes in analysis of business regulation and occupational licensing.