New study shows licensure is no boon—it’s a barrier
There’s a reason James Carville once quipped, “It’s the economy, stupid.” The economy is a perpetual concern for people, because it affects their ability to put food on the table and pursue their calling. The economy was also front-and-center in the 2024 presidential election. Both candidates promised to grow the economy and help the economically disadvantaged. But no one addressed one surprisingly obvious solution: repealing and reducing occupational licensing requirements.
This is especially important given an Obama administration report demonstrating that occupational barriers disproportionately affect low-income individuals and lower-wage workers—the very people who need economic opportunity the most. People with fewer resources are less likely and able to stop working and go back to school to get the training required by state licensure boards. They also have less clout to protect themselves from abusive licensing schemes through the political process.
Licensure reform is a bipartisan issue. Following the Obama administration’s report, President Trump signed an executive order seeking to increase economic and geographic mobility and calling on states “to reduce the burden of occupational regulations in order to promote the free practice of commerce, lower consumer costs, and increase economic and geographic mobility, including for military spouses.” Notably, the executive order points out that burdensome licensure requirements raise prices for everyday needs and make essential services more difficult to access.
Licensure isn’t just limited to professions like doctors or lawyers. According to research by the Brookings Institution, nearly one in three jobs requires a license. Unfortunately, the path to licensure is fraught with hurdles that can stifle upstart entrepreneurs and hinder innovation. From excessive training requirements to expensive fees, these barriers can exclude even competent individuals from entering fields where they would thrive.
Consider the case of cosmetology. Aspiring cosmetologists must often navigate months of training and pay hundreds of dollars in fees to obtain a license, only to end up earning an average annual income of less than $30,000. The questions then arise: Is licensure worth the costs? Does it provide any benefit to the public, or does it hold people back?
A growing consensus says it only holds us back.
Despite licensure laws’ obvious drawbacks, there is a reason these laws are difficult to get off the books. Licensure is a powerful tool existing businesses can use to keep competitors out of the market. As one research publication explains, incumbent professionals expend resources to keep licensure on the books, not because of a concern for public health and safety, but to protect themselves from more competition.
Given the myriad problems with licensure, the solution is obvious: Legislatures should eliminate licenses for low-risk occupations and ensure that any remaining licensure requirements are closely related to public health and safety. For instance, requiring childcare workers to be CPR-certified is closely related to safety. But it doesn’t make sense to require all daycare employees to have a 4-year degree.
Occupational licensure has been extensively studied with dozens of reports showing it imposes significant costs with few benefits. Fortunately, some states are recognizing the size of the problem and responding appropriately. Research finds that between 2017 and 2022, many states eliminated more licenses than they created while also decreasing unnecessary licensing requirements. However, some are doing so in a way that presents new constitutional concerns.
Not all legislative solutions are created equal. Earlier this year, legislators in California considered a bill calling on the Department of Consumer Affairs to prioritize black applicants for professional and occupational licenses. The bill died, but if it would have passed, it would have faced significant constitutional hurdles. Prioritizing people particularly based on race is pernicious. And simply pushing some further up the line in the application process does nothing to solve the underlying problems with licensure.
There are far-less-burdensome ways to promote health and safety without unduly burdening people simply trying to find a job. Alternatives—such as market competition, voluntary certifications, or simple registration—would maintain standards in different industries while preventing unnecessary obstacles for those who are willing to work hard and innovate.
The data are clear. Repealing and reducing licensure standards is a certain way to promote economic growth. Instead of handing out money or discriminating against licensure applicants based on race, the government can increase opportunities and lower the cost of important services by eliminating needless licensure laws. This is a necessary first step to make economic mobility a reality for everyone.
