Occupational Licensing Reform At a Glance

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What You Need to Know about Occupational Licensing Reform

  • Occupational licensing is the process of occupational boards establishing education and training requirements to certify individuals entering a certain industry. Common examples of well known licensing boards include the state medical boards and bar associations for doctor and lawyers respectively.
  • The number of occupations regulated by such boards has risen dramatically. According to the Federal Trade Commission (FTC), in the 1950’s less than five percent of jobs were regulated by licensing boards. By 2016, this number had risen to 30 percent.
  • The issue with many of these boards, and with licensing in general, lies with both the anti-competitive and often seemingly arbitrary nature of the requirements mandated for approval.
  • In many cases, these requirements are due to the licensing boards being made up of active market participants, who would naturally be resistant to incoming competition.
  • In one of the most egregious examples, the average education time (in days) for an EMT license is 33 days. By comparison, in the five states and territories where it is overseen by a board, the education time for an interior designer is 2,190 days, or roughly six years.
  •  In addition to the long education periods, boards can also make arbitrary education requirements, such as the achievement of certain degrees or the passing of a challenging or cost-prohibitive exam.
  • Efforts at reform of these anti-competitive boards has seen success in recent years following the 2015 Supreme Court Decision in Board of North Carolina Dental Examiners v. FTC, which held that in order for licensing boards to be immune from antitrust law, they would have to be supervised by the state government, making it harder for these boards to implement unfair business practices.
  • The over-regulation of traditionally low wage jobs and industries has an adverse effect on already vulnerable groups, such as minorities and families of military personnel, who will have to re-certify in different states every time they move.
  • Instead of serving the interests of those already in the market, ALEC Action promotes economic liberty, and looks to advance the ability of every American to find gainful employment.

Media and Resources

“Reducing Barriers to Economic Prosperity”- Secretary of Labor Alexander Acosta at the 2017 ALEC  Annual Meeting

“FTC Takes on Economic Liberty with the Introduction of New Task Force”– A short brief on Occupational Licensing and recent attempts at reform and advocacy