Study shows that more requirements lead to less jobs; employment could increase by 4.5% in certain professions if licensing reform enacted
October 18, 2017 – Milwaukee, WI – The Wisconsin Institute for Law & Liberty issued a report, Land of the Free? 50 state study on how professional licensing laws lead to fewer jobs, to measure and score the burdens of occupational licensing regulations in all 50 states plus the District of Columbia.
Using a statistical model for ten regulated professions, this study measures the impact of the patchwork of licensing regulations and rules across all 50 states to determine their impact on employment. Each state was ranked with a score according to our Red Tape Index, which measures just how burdensome a state’s regulations are for these occupations. The findings include:
- States with more burdensome licensure requirements (fees, training hours, exams, and age requirements) had significantly lower employment in the ten professional occupations.
- We estimate that employment in the U.S. for those ten professions would increase by 4.5% if licensing regulations were reduced to the level of the least burdensome state (Hawaii).
- Our models show that 23 states could see employment growth of 5% or above for these ten professions if they lowered their licensing laws to those of the least burdensome state – Hawaii.
- Tennessee, Alabama, Nevada, Florida, and Wisconsin are ranked as the most burdensome states for the professions under study.
- Hawaii, Massachusetts, Connecticut, Rhode Island, and Utah are ranked as the least burdensome states for the professions under study.
The growth of occupational licensing is increasingly recognized as a barrier to opportunity. Whereas in 1950 just 1 in 20 workers required a license to work, now close to 1 in 4 do. In state houses across the land, governors and legislators are embracing reform. In Washington, the burdens of occupational licensing laws have garnered bipartisan support in Congress. Several bills, including the New HOPE and Restoring Board Immunity (RBI) Acts, have been introduced to spur reform and enhance opportunity. With more professionals, aspiring professionals, and innovators running into licensing laws, the case for reform has found a broad and diverse audience that includes conservatives and liberals, Democrats and Republicans, and the Obama and Trump administrations.
“This new study provides critical evidence that when states enact burdensome occupational licensing laws, it serves to hurt employment,” said Collin Roth, Research Fellow at the Wisconsin Institute for Law & Liberty. “Policymakers must now consider if the current protections that licensing provides are worth the price in lower employment.”
“The findings of our study show that occupational licensing laws, or government permission slips to work, serve as a major barrier to entry for workers in America. This should serve as a clear call for reform,” said Will Flanders, Ph.D., Research Director at WILL.
This study underwent a double-blind review process by two university-based scholars.