Lawmakers urge states to scrap unnecessary occupational licensing
During a subcommittee hearing, members of the House heard from experts who shared suggestions for reform.
Experts told lawmakers last week at a hearing on Capitol Hill that occupational licensing requirements need reform, and a House subcommittee has called on states to act.
"While there may appear to be no downside in requiring a profession to be licensed, over-regulation where the public safety is not in question has tangible, adverse consequences," Bryan Schneider, secretary for the Illinois Department of Financial and Professional Regulation, told the Subcommittee on Higher Education and Workforce Development.
Robert McNamara, a senior attorney for the Institute for Public Justice, told Capitol Hill lawmakers that the American Society for Interior Design and other industry groups conducted a decades-long, nationwide campaign to impose licensing on interior designers. He said five states "bent" to this pressure and imposed licensing restrictions, while other states imposed laws limiting when individuals can refer to themselves as interior designers.
"It is difficult to imagine any conceivable danger from a misplaced throw pillow or unsightly shade of paint," McNamara said at the June 20 hearing.
Occupational licenses are required for a growing number of workers. In the 1950s, only 5% of workers were licensed; today, licensed workers make up one-quarter of the workforce, according to Rep. Brett Guthrie (R-NY), the subcommittee chairman.
Occupational licensing is one of the leading barriers to the American workplace, McNamara said. The cost of obtaining a license alone can serve as a barrier; likewise, state licensing schemes can lead to decreased worker mobility and licensing can create a "state-sanctioned monopoly" that leads to reduced consumer choice and increased prices, Schneider said.
Inconsistencies in licensing also present issues for would-be licensees. Guthrie said setting licensing requirements is mostly a state responsibility. The result is that the procedures and timeframes for obtaining a license vary from state to state. It takes 233 days to get a cosmetology license in New York, but 490 days in Iowa, Guthrie said.
Workers with criminal histories face even greater challenges in obtaining licenses. As many as 100 million Americans have a criminal record, Rebecca Vallas, an attorney and vice president of the Poverty to Prosperity Program at the Center for American Progress, said at the hearing.
Occupational licensing requirements unfairly shut workers with criminal records out of the labor market, Vallas argued, noting that the consequences of a criminal record "far outlast many individuals' formal sentence" — a contradiction in a country with a judicial system built, in part, on the notion of a person "paying their debt to society" through prison time.
While the effort to reduce occupational licensing requirements has been a priority for President Donald Trump's pick for Secretary of Labor, it's not a new initiative. The Obama administration issued a report in 2015 concluding that licenses are cost-prohibitive, out of sync with the skills necessary for jobs and sometimes raises consumer prices. While occupational licensing plays an important role in some areas, it poses unnecessary barriers in others, the report said.
With both sides of the aisle generally on board, reform could be a reality. What reform might look like, however, isn't as clear. McNamara said that reform efforts must begin with reducing the number of licensing requirements and minimizing the burdens of those requirements that remain, rather than starting with the goal of enabling already-licensed practitioners to move across state lines.
Licensure should only be imposed where less restrictive alternatives are not enough to address a real problem, McNamara continued. Regulators can consider alternatives where litigation and market competition prove lacking — consumer protection laws, inspections and bonding and insurance requirements as well as voluntary certification, an often-overlooked alternative to occupation licensing, he said. Under such a scheme, market participants can choose to undergo testing to obtain a certificate that they meet a certain level of quality.
Schneider said Illinois, unlike most states, doesn't regulate through individual professional boards. Rather, he said, a department oversees all individual occupational licenses in the state — a structure that provides operational efficiencies and a "holistic view" of the regulatory landscape.
The state eliminated 11 license categories that had few complaints and posed little harm to the public. It also has proposed a "practical review process" used by 19 other states, in which an unregulated profession would have to undergo a thoughtful cost-benefit analysis performed by an unbiased, trained economist in the university system before introducing legislation.
Vallas told hearing attendees about the "fair chance licensing" movement in which a growing number of states have advanced reforms that ensure job-seekers with records are not shut out of jobs. Five states — Arizona, Georgia, Illinois, Kentucky and Louisiana — enacted fair chance licensing reforms in 2017, she said. Similar reforms became law in Delaware, Indiana, Kansas, Maryland, Massachusetts and Tennessee in 2018. Three states — California, Pennsylvania and Rhode Island — have introduced their own measures.
Vallas said "clean slate" — the automatic sealing of minor, nonviolent records after an individual remains crime-free for a set time — is another reform that is gaining traction in the states. Vallas also offered suggestions from a report by the National Employment Law Project, including the removal of vague and broad criteria such as "good moral character," eliminating disqualification for offenses of "moral turpitude," limitations on the scope of the licensing inquiry and uniformity in licensing standards.
Advocates argue that licensing protects the public but, with support on both sides of the aisle, reforms could at least be up for debate. In a statement, however, the committee suggested that states review their licensing practices, "and whenever appropriate, remove unnecessary barriers to upward mobility and economic growth."