A few weeks ago, the Institute for Justice released the third edition of its “License to Work” report on occupational licensing in America. Specifically, the report compares whether and how the 50 states and Washington, D.C. impose government-mandated licensing requirements to 102 lower-income occupations.
Once again, thanks to IJ, we can see that licensing requirements vary dramatically from state-to-state, and not always how you might expect.
New York, for instance, requires government licensing for 41 of the 102 studied lines of work. By comparison, Florida requires licenses for 55 of them and Texas 38. California beats those three by a large margin, requiring licenses for 75 of them.
California also imposes far more onerous education and experience requirements for workers to get a license compared to the average state (837 days versus 350 days) and even charges higher licensing fees ($517 versus $284).
To what end?
Well, in 2015 the Obama White House issued a report acknowledging, “There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across state lines.” The Obama administration recommended renewed scrutiny of licensing requirements.
That same year, the center-left Brookings Institution published a report on licensing noting that, “ There is little evidence to show that the licensing of many different occupations has improved the quality of services received by consumers, although in many cases it has increased prices and limited economic output.”
The following year, California’s Little Hoover Commission released a report stating, “California has enacted a thicket of occupational regulation that desperately needs untangling in order to ease barriers to entering occupations and ensure services are available to consumers of all income levels.”
In 2022, the commission reiterated its call for state lawmakers to take action, saying, “California needs to better understand how its current occupational licensing system works or doesn’t work. The state must also break down the barriers preventing Californians from accessing good jobs.”
In 2018, IJ estimated that California’s extensive and onerous licensing laws cost the state approximately 195,917 jobs and resulted in up to $22 billion in economic misallocations.
And yet, for all of this, not a whole lot has been done to revisit occupational licensing requirements in California.
There are feasible reasons why, none of them legitimate.
Licensing requirements benefit those already in a particular line of work by reducing competition and allowing more lucrative incomes. This incentivizes industry groups to form, hide behind the mirage of expertise and professionalism and advocate against reform or repeal of licensing requirements for purely self-interested reasons.
Of course state lawmakers are mostly in the business of getting re-elected — and so don’t want to anger donors or potential donors. I get all that. But if there are any state lawmakers in Sacramento who are actually interested in doing the right thing, freeing up economic opportunities for Californians and potentially reducing some burdens on lower-income Californians, occupational licensing reform is there for the taking.
It’s a long time coming. It’s been 10 years since I wrote a commentary for the Reason Foundation on rampant occupational licensing in California, calling it “arbitrary, protectionist and unnecessary.” I’m still holding out hope lawmakers get around to licensing reform.
Sal Rodriguez can be reached at firstname.lastname@example.org