This summer, the White House released a report on the economic effects of occupational licensing—a worthwhile effort, as the share of workers licensed at the state level has increased five-fold since the 1950s, and, currently, a full third of U.S. jobs require a license. With the average state license for low- and moderate-income professions requiring $209, nine months of education and training, and an exam, it’s time to ask: What, if any, benefits do we gain from placing these burdens of occupational licensing on individuals?
The answer paints a bleak picture. Studies show that despite the increase in licensed workers since the 1950s, occupational licensing results in little improvement of the quality and safety of goods and services. Additionally, unlicensed workers are often as qualified as their licensed counterparts, meaning such licensing practices have an insignificant impact on experience within a profession.
Licensing does affect other areas of the economy, however: Requiring workers to obtain occupational licenses has resulted in higher prices, with costs increasing by between 5 and 33 percent. Just as concerning is the impact of occupational licensing on employment: Research finds that job growth may be reduced by up to 20 percent in occupations that require licensing.
The Charles Koch Institute remains committed to working toward a freer society and the increased well-being it provides for the overwhelming majority of people. To that end, we invite new and continuing research into the implications occupational licensing holds for the economy and how such practices affect individuals across the nation.