Some Occupational Licensing Progress at State Level
Last week, economist Tim Kane put on YouTube a civil and brief 3-way discussion among himself, Robert Litan, and Allison Schrager about what 3 economic policies each would advocate to “save” U.S. democracy. One of Schrager’s policy proposals (at the 9:04 point) was to federalize occupational licensing rules. She argued, correctly, that state rules reduce mobility across states because someone who is licensed in state X might not be able to practice in state Y due to different rules in state Y.
Schrager’s case is that if we had federal licensing, people with particular licenses could move freely between states and not have to retrain, attend classes, etc. before practicing in the new state. That’s the upside. But in the discussion following, Tim Kane notes the downside: that someone in the Labor Department 20 years down the road (I would say fewer than 5 years down the road) will require a 5,000-word essay for plumbers or whatever. How, Tim asks (at the 10:40 point), do we stop that. Schrager doesn’t answer. Instead she says that we have that at the state level. She’s right. But if we get it at the federal level, the federalism exit option is blocked.
There is some good news here. Federalism is working to some extent. The Arizona government, under previous Governor Ducey, changed the law to allow people who are licensed in one state to automatically get a license for the same occupation in Arizona. Also, New Hampshire governor Chris Sununu, in his Executive Budget Summary proposed the following:
[T]he budget eliminates 692 unnecessary statutory provisions, 14 unnecessary regulatory boards, and 34 license types. Licensing timeframes will be standardized for all professionals to eliminate administrative burden and ensure that everyone in New Hampshire who applies for a license receives it in a timely manner. At the same time, universal recognition of licensed professionals in other states is established making it simple to relocate and join our state’s workforce.
Florida governor Ron DeSantis has moved Florida somewhat in that direction. And, although this isn’t quite the same, Pennsylvania governor Josh Shapiro, in his first day in office, signed an executive order eliminating the college degree requirement for 65,000 state government jobs.
If we had state governments representing even 40% of the U.S. population implement such reforms, that would be so much better than shifting things to the federal level.
Feb 17 2023 at 9:36am
Wow! That’s some progress. Removing labour restrictions and enlarging the labour pool for the affected occupations enables a wealthier population. Good to see progress (sort of) coming from both parties. I hope this is just the beginning.
Feb 17 2023 at 12:39pm
I don’t understand why occupational licensing is mandatory. How about reforming the law so that someone can sign a waiver showing that they understand their plumber, hairdresser, wedding photographer, or whatever is not licensed and that the person hiring them accepts the full risks and responsibilities of hiring someone that the state hasn’t licensed. You can keep your licensing programs at the state or national level. I don’t care as long as I have the ability to hire someone that isn’t licensed.
Feb 17 2023 at 1:24pm
Feb 17 2023 at 3:15pm
I agree too. Licensing could be replaced with optional certifications by private organizations.
Feb 17 2023 at 5:28pm
Mark, federalism is working to some extent for CCW permits. There is reciprocity among several states as well. Georgia concealed carry permits are honored in the 33 states.
Feb 18 2023 at 6:01am
This would be a good suggestion, if the ostensible goal of licensing was its actual goal.
Of course, anything in the real world will have many factors contributing to its continued existence. For mandatory licensing the restriction of supply helps the wages of the insiders and gives the bureaucrats who decide on admission criteria power.
Your suggestion would make those mechanisms weaker, even if it would be great for protecting unsuspecting members of the public from unqualified practitioners.
Feb 18 2023 at 5:59pm
Agree that we should do away with most occupational licensing. Where we decide to keep licensing it should be federalized or states should just be required to recognize licenses from other states. I have to maintain licenses in 2 states and one of those states is New Jersey. Its not like I forget what to do when I cross into New Jersey, besides which we have better outcomes in PA than NJ anyway. Its awful. The argument that the feds might do something in the future is pretty lame as, is pointed out, it is already happening at the state level. Besides which it is not just licensing. For professions needing licenses there are sometimes other requirements behind licensing that are different in every state.
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