Institute for Justice

Occupational Licensing Blocks Americans’ Right to Earn an Honest Living

What is Wrong With Occupational Licensing?

Every American deserves the opportunity to earn an honest living. Yet occupational licenses, which are permission slips from the government allowing someone to work, routinely stand in the way of honest enterprise. Without these licenses workers can face stiff fines or even risk jail time.

The arbitrary and excessive requirements for licensure, though, can be an enormous burden and often force entrepreneurs to waste their valuable time and money to pursue a license rather than actually working. These burdens too often have no connection at all to public health or safety. Instead, they are imposed simply to protect established businesses from economic competition.

For a growing number of Americans, gainful employment no longer requires convincing only a potential employer or customer of their value. It requires also convincing the government. This barrier to an honest living makes entrepreneurship more difficult in general. Furthermore, it can be an effective bar on entering many low income occupations for people with less access to financial capital or formal education.

These laws are wrong—economically, morally and constitutionally. Consumers and employers, not legislators and bureaucrats, should decide who succeeds in which jobs. To expand economic opportunity and vindicate the basic constitutional right to economic liberty, IJ is dedicated to rolling back these unnecessary and harmful restrictions.

Nivea Earl fought for and won her right to braid hair without the need for a costly and time-consuming cosmetology license in Arkansas.

Abbot Brown in the wood working shop at at St. Josephs Abbey in Covington, La. Louisiana told the monks they needed a license to build wooden caskets in the shop and sell them to the public.

License to Work

An “occupational license” is, put simply, government permission to work in a particular field. To earn the license, an aspiring worker must clear various hurdles, such as earning a certain amount of education or training or passing an exam. In the 1950s, only one in 20 U.S. workers needed the government’s permission to pursue their chosen occupation. Today, that figure stands at almost one in three.

This study is the first to examine the scope of licensing laws for low and moderate income occupations across all 50 states and the District of Columbia, as well as the first to measure how burdensome those laws are for aspiring workers.

In documenting the license requirements for 102 occupations nationwide, this report finds that these laws can pose substantial barriers for those seeking work. These barriers affect particularly those most likely to aspire to these occupations—minorities, those of lesser means and those with less education. Moreover, about half the occupations studied offer the possibility of entrepreneurship, suggesting that these laws hinder both job attainment and creation.

Key findings include:

The 102 occupational licenses studied require of aspiring workers on average, $209 in fees, one exam and about nine months of education and training.

Thirty-five occupations require more than a year of education and training on average, and another 32 require three to nine months. At least one exam is required for 79 of the occupations.

Interior designer is the most difficult occupation to enter, though it is licensed in only three states and D.C. Taking into account how many states license an occupation, cosmetology trades (cosmetologist, barber, skin care specialist and manicurist), truck and bus drivers, and pest control applicators are among the most widely and onerously licensed occupations.

Louisiana licenses 71 of the 102 occupations, more than any other state. Arizona licenses 64, California 62 and Oregon 59. Wyoming, with a mere 24, licenses the fewest, followed by Vermont and Kentucky at 27. On average, states license 43 occupations.

Hawaii has the most burdensome average requirements for the occupations it licenses while Pennsylvania’s average requirements are the lightest.

Arizona and California rank as the most widely and onerously licensed states, with a large number of licensed occupations and burdensome requirements.

The data also reveal the arbitrary and irrational nature of licensure:

Most of the 102 occupations are practiced somewhere without government permission and apparently without widespread harm. Only 15 are licensed in 40 states or more, and on average, the 102 occupations are licensed in just 22 states—fewer than half. This includes a number of occupations with no self evident rationale for licensure, such as interior designer, shampooer, florist, home entertainment installer and funeral attendant.

Licensure burdens often vary considerably across states, calling into question the need for severe burdens. For instance, while 10 states require four months or more of training for manicurists, Alaska demands only about three days and Iowa about nine days.

The difficulty of entering an occupation often does not line up with the public health or safety risk it poses. For example, 66 occupations have greater average licensure burdens than emergency medical technicians. The average cosmetologist spends 372 days in training; the average EMT only 33.

Such inconsistencies give good reason to doubt that many licensing schemes are necessary. These inconsistencies may reflect, not the relative public health and safety risks of occupations, but instead the lobbying prowess of practitioners in securing laws to shut out competition.

State policymakers should review current and proposed licensure schemes to determine whether they truly serve the public or instead fence out competition. As millions of Americans struggle to find productive work, one of the quickest ways legislators could help would be to reduce or remove needless licensure burdens.