Universal Licensing Reciprocity Helps Moving Americans

How state-by-state licensure makes moving harder than it has to be

Moving is already a painful experience, whether you’re Ralph Macchio in The Karate Kid or just a normal person looking for a job or a change of scenery. We don’t need policies that make it even more difficult.

For those workers and their spouses who need a license to work, however, many states do just that.

Last year, Arizona became the first state to recognize other states’ occupational licenses for people moving in. “Universal recognition” legislation allows any professional who has met the requirements and maintained licensure for a year in any other US state to transfer that license to Arizona and begin working.

Gov. Doug Ducey, who championed the reform, said: “You don’t lose your skills simply because you pack up a U-Haul truck and make the decision to move to Arizona.” This seems logical enough, but be careful, if you’re in New Jersey and want to load that U-Haul truck yourself, you had better have a license to do so.

In less than a year, over 750 people have been able to move to Arizona and begin working immediately. This helps not only those moving to Arizona but the Arizonans who are now able to receive services from these professionals.

Universal recognition is gaining traction across several states. Montana, Pennsylvania, and Utah have recently joined Arizona and passed universal recognition legislation of their own, removing one of the most daunting hurdles workers face while moving to a new state.

Most other states currently lack a mechanism to allow trained professionals, who have demonstrated quality and have practiced without complaints, to transfer their licenses and easily start working after a move. Without universal recognition, professionals moving to new states must reapply and jump through hoops again, just to prove competencies they have already demonstrated. The interruption of a professional’s career after a move to a new state can be a serious hardship, which piles on the stressful and expensive process of uprooting one’s life.

When people move between states, we don’t make them sit for the learner’s permit exam or retake the driving test to get a new license. Instead, we trust other states’ screening mechanism for the ability to drive a car, which is far more dangerous than most licensed occupations.

How do licensing laws pose barriers?

While licensing laws are passed at the state level, the differences between any given two states’ requirements act as a hurdle for licensed professionals considering a move. These barriers can seriously hinder Americans in licensed fields from moving between states. According to a study conducted by economists from the University of Minnesota, occupational licensing reduces worker mobility between states by 36 percent.

When there is a shortage of professionals in a state, the easiest solution is for professionals from other states to move there. Licensing laws make unnecessary hassle for doctors, physical therapists, dentists, barbers, and more who would be willing to take their talents to another state.

The negative side effects of licensing have been well-documented.

Licenses restrict the entrance of new professionals, artificially raise wages, the prices consumers pay, slow down innovation and entrepreneurship, and erect barriers to low-skilled workers trying to enter the labor market. All that, with no measurable effect on quality, according to a 2015 White House report. Similar findings have come from researchers at ideologically diverse places like the National Bureau of Economic Research, the University of Minnesota, the Center for the Study of Economic Liberty, and the Council of Economic Advisors.

The issue of interstate mobility has become salient in light of our response to COVID-19.

Due to shortages of healthcare workers, localities with early outbreaks feared being overwhelmed. Healthcare professionals in states with far fewer cases were ready and willing to move, but they were blocked by state licensing requirements. Fourteen states quickly responded by temporarily granting healthcare workers temporary reciprocity, to encourage them to move to the state and begin practicing without delay.

Politicians on both sides of the aisle support licensing reform, recognizing the costs imposed by licensing laws. Both the Obama and Trump administrations have made an effort to reduce licensing burdens felt by workers and consumers. While the governors of Arizona and Utah are Republicans, the governors of Pennsylvania and Montana are Democrats.

Although state-by-state licensure directly impedes the mobility of licensed workers, it does have some supporters. Members of licensing boards have spoken out against the reforms, characterizing them as dangerous to the health and safety of citizens and a loophole to funnel poorly trained professionals into the state. Licensing boards stand to lose from universal recognition because making it easier for professionals to move to their state and begin to practice chips away at their licensing premium.

Despite pressure from licensing boards, several states have followed Arizona’s lead by proposing universal recognition bills of their own, including California, Georgia, Indiana, Missouri, New Hampshire, New Jersey, Ohio, Virginia, West Virginia. As more states join Arizona and allow universal recognition, they can help make moving between states that much easier.

Moving is already a hassle, and being forced to drop out of the workforce to go through the process of reapplying for licensure only adds to the delay and uncertainty. It is bad enough trying to find a new go-to bar, pizza shop, and take-out place. Jumping through hoops for a new license is too much icing on the cake. Universal recognition helps ease the burden of moving by removing at least one hurdle and providing more skilled professionals

Conor Norris is a Catalyst Policy Fellow and a Research Analyst with the Knee Center for the Study of Occupational Regulation (CSOR) at Saint Francis University. His areas of interest include occupational licensing and health care scope of practice laws, monetary policy, and long-run growth. Conor is an alumnus of the Mercatus Center MA Fellowship at George Mason University, where he received his MA in economics in 2018. He interned at the Cato Institute in 2017 in the Center for Monetary and Financial Alternatives. He loves reading good history books and bad puns and is still bitter that the Star Wars expanded universe is no longer cannon. Conor grew up in Williamsport, Pennsylvania and after spending two years in Arlington, Virginia, he now lives in Altoona, PA.
Catalyst articles by Conor Norris