It’s Becoming Easier to Get Permission to Work, But Not by Enough

After decades of increasing barriers to entry for people looking for jobs or hoping to start businesses, occupational licensing reform is gaining traction. Reforms ease licensing rules, extend recognition to licenses issues elsewhere, and sometimes (not often enough) eliminate the requirement that people seek government permission to work. Evidence suggests that such reforms build prosperity, encourage entrepreneurship, and make it easier for people to move from place to place. But red tape still makes it difficult for people to find employment or strike out on their own, and the current economic crunch makes it more urgent than ever to sweep away these hurdles.

In Arizona, a new study finds that easing occupational licensing requirements is boosting the state’s economy. It’s long past time after years of increasing difficulty for people seeking work.

“Nearly thirty percent of American jobs require a license today, up from less than five percent in the 1950s,” the Federal Trade Commission (FTC) noted in a 2018 report. “For some professions, occupational licensing is necessary to protect the public against legitimate health and safety concerns. But in many situations, the expansion of occupational licensing threatens economic liberty.”

The silliness of requiring licenses based on hundreds of hours of training and thousands of dollars in expense so that those who make it through the gauntlet can work as hair braiders and landscapers is one of the few polices on which Democrats and Republicans can often agree. Both the Trump and Obama administrations called for reform, as did President Joe Biden last year. 

Pointing out that licensing laws not only create barriers to entry but also deter people from moving from one state to another for fear of having to go through the whole process again, the FTC recommended making licenses portable. “By enhancing the ability of licensees to provide services in multiple states, and to become licensed quickly upon relocation, license portability initiatives can benefit consumers by increasing competition, choice, and access to services, especially with respect to licensed professions where qualified providers are in short supply.”

But licensing is handled at the state level, where trade associations that want to limit competition for existing practitioners often gain the ears of legislators. Whenever you hear about opposition to reform efforts, that’s usually the source. Nevertheless, with Arizona leading the way with HB 2569, 11 states adopted universal licensure by mid-2021 and many others increased their recognition of out-of-state licenses. Resistance eroded after states made it easier for medical professionals to practice across state lines early in the pandemic, kneecapping the case for restrictions on barbers and realtors. And the reforms are paying off.

“Arizonans have applied for 5,269 licenses under the law, and 4,723 have been issued,” reports the Common Sense Institute of Arizona on the impact of the 2019 universal licensing law. “By 2030, HB 2569 is projected to increase employment in Arizona by 15,991 workers; increase Arizona Gross Domestic Product by $1.5 billion; and increase the state’s population