Occupational licensing directly affects nearly 30 percent of U.S. workers today and continues to grow in density and scope. In this article, we identify and analyze those rare instances when occupational licensing laws have been eliminated — what we refer to as “de-licensing.” We also discuss recent examples in which courts decided to limit the scope of occupational licensing laws, and we analyze recent efforts (almost uniformly unsuccessful) of a few states to de-license groups of occupations. The reason proposed for most of these efforts is that excessive levels of licensing have hindered job creation, especially for people with lower levels of education. We argue that the paucity of successful de-licensing efforts is due to intense lobbying by associations of licensed professionals as well as the high costs of sunset reviews by state agencies charged with the periodic review of licensing and its possible termination. ...Addressing de-licensing is important because it raises several questions. Once an occupation is licensed, is it likely to remain licensed, or do effective mechanisms exist to periodically reevaluate whether the continued licensing of the occupation is in the public interest? What effects has de- licensing had or could be expected to have on the numbers of practitioners and earnings levels in the de-licensed occupation? Various studies have found that licensing, much like unions, can reduce practitioner numbers while increasing earnings. Does de-licensing cause converse effects? That is, would de-licensing increase the number of practitioners while decreasing earnings? If so, how sizable are these effects and how rapidly would they occur? These questions are particularly important because the extent to which job regulation (such as licensing) inhibits job growth and the potential for deregulation to promote job growth have recently become important national issues.
12 December 2015
The De-Licensing of Occupations in the United States by Robert J. Thornton and Edward J. Timmons in (2015) Monthly Labor Review comments