Occupational Licensing Regimes Are Tough to Dislodge, So Let’s Try a Different Approach

By guest author Eli Lehrer
February 25, 2020

More than any other class of regulations, America’s bewildering profusion of professional licensing laws limits economic opportunity. Unfortunately, professional licenses have proven very difficult to repeal, so progress against them remains limited. This suggests it’s time for a new strategy that focuses on changing the scope of professional licenses rather than just focusing on trying to eliminate them. Doing so would have tremendous political and practical advantages. 

Let’s start with some background: About a third of all American jobs require a license. While professions like medicine and civil engineering involve such major safety concerns that centralized oversight of their practice makes sense, it’s harder to justify laws requiring government permission to upholster a chair, design a bedroom, shampoo hair, or wrap packages. But many states still require a license for occupations for interior designers, hairdressers and the like. This massively limits opportunity, particularly for people who might be good at a professional task but lack the money to pay for the training or the academic aptitude to pass a written test. By all measures, occupational licensing places restrictions on upward mobility.

The professional licensing regime’s economic cost has attracted attention from across the political spectrum. While libertarian groups like the Institute for Justice have won important court victories on the topic and conservative leaders like Arizona Gov. Doug Ducey have made progress at the state level, they aren’t alone. Progressive icon George McGovern was the first presidential candidate to draw attention to the negative impacts of licensing when he criticized it during his 1972 campaign against Richard Nixon. More recently, Jared Polis — the libertarian-leaning Democratic governor of Colorado — has vetoed professional licensing bills, and Democratic presidential candidate Deval Patrick oversaw a licensing overhaul when he was governor of Massachusetts. Likewise, former President Barack Obama’s Council of Economic Advisers issued a major report drawing attention to the problems resulting from over-licensing.

For all this apparent comity, progress appears slow. To date, delicensing successes have mostly involved small or dying industries like timeshare sales (Illinois) and television repair (Massachusetts). Licenses have concentrated benefits reaped by incumbents in licensed fields — who can charge more for their services — and diffuse costs, which are borne by people barred from a career path as well as the public at large. This means that organized lobbies work to expand and protect licenses while only a few small groups — generally supported by philanthropy rather than economic interests — work to oppose them.

In this context, one underused but vital strategy deserves much broader use: changing the scope of practice under existing licenses. While some licensing requirements are unreasonable — nobody needs hundreds of hours of training to shampoo hair or apply makeup — a few are similar to what the market would demand. For example, home health aides, who help sick and disabled people attend to needs like hygiene and compliance with medication schedules, are required to have only 75 hours of training in most states and finish a simple exam. This is quite reasonable. 

But under current laws, many tasks that home health aides might otherwise do — like performing occupational therapy and playing a larger role in diagnosing medical problems — are illegal for aides to perform without the much longer and more costly classroom training required of an occupational therapist, doctor or nurse. Expanding the scope of the home-health-aide license to allow these individuals to complete such tasks could benefit them tremendously, all while reducing the cost of medical care. And while nurses and doctors might object, home health aides and their clients could counterbalance their efforts. The same thinking might apply to dozens of other professions, ranging from hair care to plumbing.  

In other cases, it might make sense to narrow the scope of practice under certain licenses. For example, the genuine safety concerns involved in wiring a brand-new home warrant some sort of certification regime. But connecting a thermostat or installing a new electrical outlet are within the capabilities of many mechanically skilled homeowners and probably shouldn’t require an electrician’s license. In this context, the scope of electrician’s licenses might be narrowed to include only those tasks that entail serious risk if done wrong while letting anyone with a simple safety certification perform other, less dangerous tasks. 

No single set of reforms can do away with most professional licensing burdens. But a greater focus on scope-of-practice reform deserves serious consideration from those looking to reduce the burden of professional licensing. 

Eli Lehrer is President and a Co-Founder of the R Street Institute