After nearly 50 years of occupational licensing reform, licensing laws still cost the U.S. economy an estimated $200 billion annually. These restrictions apply to 350 professions, many of which are innocuous occupations by any metric. This protectionism results in virtually no statistical improvement in safety, but succeeds in shielding industry elites from competition.
Yet, attempts at curbing these protectionist laws keep failing.
Deregulation enjoys ideology-transcending popularity, but many so-called reforms are in reality engineered by insiders maintaining the status quo.
This problem has permeated universal license recognition legislation. As intended by true reformers, the universal recognition laws in 22 states remove pointless restrictions; in practice, the fine print often limits their reach (or even reverses it). Reformers need to examine local rules and determine if they have been watered down by these common caveats.
Occupation Restrictions
States with so-called universal recognition laws often leave out numerous professions. Regulators cite the unique nature of local laws in these fields, insisting licensees need to start at the beginning in each state (with lawyers bearing a particular burden, as explained here.)
However, because different states exempt different professions, this reasoning proves flimsy. If other areas operate successfully with license recognition in plumbing, for instance, surely it is not so locally specialized as to prohibit any state from following suit. Furthermore, if plumber licensing rules are that unusual in one state, that itself likely indicates an overregulation issue that should be addressed.
Residency Rules
Many states make a local license contingent on obtaining local residency. Not only does this push out-of-state workers deciding between various states elsewhere, to a more welcoming environment, it postpones the filling of positions for workers who do agree to the arrangement.
Legal residency involves a term of physical presence in a new state, as well as fees and time for processing. Although verifying identity is important, states can utilize interstate compacts of the type used for travel nurses, safely expediting temporary licenses while the workers establish residency in the state’s usual time frame. This can be from one week to two months for most purposes. States should not require the longer times necessary for financial benefits such as taxes and in-state tuition.
Jobs come and go with normal market fluctuations, and states putting this hurdle in the way of employees unnecessarily bottleneck their local market. In a profession such as nursing, which is both historically understaffed and a lifesaving need, this is not only an economic inefficiency but also a healthcare harm.
Substantial Equivalency vs. Similar Scope Of Practice
Legislators choose whether to base state-to-state recognition on substantially equivalent education/experience or on similar scope of practice. Although the two ideas sound similar, the distinction profoundly affects workers and the economy at large.
Substantial equivalency requirements generally involve proof, often to a licensing board with some conflicts of interest, of nearly identical experience and schooling. This can be nearly impossible to show, especially when some boards have incentive to deny a license. And again, it has little relation to safety or competency.
A looser mandate for similar scope of practice, by contrast, has a lower burden of proof and does not require point-by-point comparison judged by boards. The idea behind the rule is that if another state recognized a plumber’s license, and that state’s record shows no cause for concern in the plumbing profession’s outcomes, no cause for time-consuming and expensive deeper examination is likely to be useful or necessary.
Conclusion
One in four workers is subject to occupational licensing burdens, and often those burdens are outrageously heavy. Universal recognition has the potential to ease them.
Licenses need to be based on competency and outcomes, instead of irrelevant bullet points. Biased members of an industry must no longer be allowed to determine who gets to compete with them, and professionals need to be allowed to perform the jobs they are clearly capable of doing.