Our country made great strides to reduce red tape during the coronavirus pandemic. But, unfortunately, a lot of the restrictions returned after the pandemic. Test how much you know about occupational licenses.

Everyone loves the party game/icebreaker “two truths and a lie.” Can you identify which of the following is NOT true about occupational licensing? 

A. Occupational licenses make it difficult for many people to start a new career.
B. Occupational licensing requirements are uniquely tailored to the responsibilities of each specific licensed profession.
C. Occupational licenses are often not necessary to protect the health and safety of Americans.

Let’s take one statement at a time.

A. TRUTH! Many people who are looking to begin careers in licensed occupations face great barriers because of the expensive, time-consuming, and unnecessary training that many states require. There are many examples across the country where individuals, seeking to improve their lives and financial stability, are punished and shut down by state boards for their hard work and innovation. As the Institute for Justice’s renowned research demonstrates, some of the occupations licensed may surprise you: home entertainment installers, florists, interpreters for the deaf, interior designers, and upholsterers—to name a few.

Additionally, many occupational licenses restrict those with criminal backgrounds from obtaining a license. Many licensed occupations use skill sets that are taught in prison rehabilitation programs, but some states impose blanket prohibitions against people with a criminal record, regardless of whether their crimes were related to the work they seek a license for. This greatly reduces career opportunities for former prisoners and without a job, their chances of a successful new start in life are severely diminished.

B. LIE! Occupational licensing requirements vary widely between states. While one state may require 200+ hours of training to obtain a license, another state may not even require a license for that occupation. This makes it difficult to move between states and limits entrepreneurial opportunities. 

Instead of being tailored to each profession, occupational licensing requirements often reflect the efforts of those who already hold an occupational license in that state to limit the competition. By restricting the free market through arbitrary licensing requirements, competition is reduced and innovation is stifled. Reducing the number of arbitrary occupational licenses would both provide new opportunities for many individuals while driving down prices and improving service for the American public as a result of the free-market competition. 

C. TRUTH! While licensing is important for some occupations, such as those in the medical professions, most occupations do not require licensing to protect either the public or the professionals themselves. Occupational licenses are required for a broad variety of occupations, many of which clearly pose no risk to health or safety. These range from florists to shoeshining, music therapists, and more. 

Some states have made progress in occupational licensing reform, primarily through enabling universal license recognition. This allows states to recognize the occupational licenses that individuals hold in other states, without requiring them to undergo further and unnecessary training and education. However, the large majority of states continue to create barriers to economic improvement and entrepreneurial innovation. Broad occupational licensing reform is needed to remove arbitrary licensing requirements and allow universal recognition of licenses between states.

Bottom line:

Instead of allowing unnecessary occupational licenses to stay in place, states should conduct regular cost-benefit analyses of their licensing systems to determine if they truly serve a public good and remove any licensing requirements that do not.

To learn more about occupational licenses, read this IWF policy focus: Solutions to Occupational Licensing Challenges