Audiologists, auctioneers, and crane operators face a common challenge: they need licenses to legally do their jobs. This creates hurdles and drives up prices, according to research from the West Virginia University Knee Regulatory Research Center.
The researchers made a new database that shows how job licenses affect the workforce. The database looks at regulations for 50 jobs in all 50 states and the District of Columbia. It covers various professions, from acupuncturists and interior designers to nuclear medicine technicians and shampoo assistants.
“We have stronger evidence that licensing reduces the supply of professionals than that it ensures quality,” the researchers explain. “Professional licenses increase the cost and time to enter a licensed profession. As a result, consumers pay higher prices for services.
Restricting supply
Licensing is a type of rule that sets specific conditions for people before they can legally work in certain jobs. In the 1950s, only about 5% of workers in the U.S. needed licenses. Now, it has risen to 22%. The goal of job licensing is to make sure services are good quality and consumers are safe, but the results are a bit mixed.
There’s an estimate of more than 1,000 jobs that need a license in at least one state, but there’s no exact count or complete list of all licensed jobs in every state. The researchers found that states don’t even have a central place to display the jobs they license and the requirements. Many policymakers don’t know about licensing laws in other states.
While there are other databases of licensed jobs, like the Institute of Justice’s list, they mainly focus on lower-skilled jobs, leaving out many skilled ones, especially in health care. The RRC database covers info on over 30 health care careers, including details not found in other collections, such as citizenship, English proficiency, and good moral character requirements.
Labor mobility
The RRC database also tells about transferring licenses between states. Because licenses are only valid in one state, it’s harder for workers to move to a different state. Policies like endorsement or reciprocity in some states might ease that burden.
As an example, the researchers used the database to compare licensing rules for audiologists in different states. Audiologists aren’t covered in other job databases or research, even though rules for them can be very different from one state to another.
In Pennsylvania, audiologists pay a $50 licensing fee, while in Minnesota, they might pay up to $544. Nineteen states need audiologists to have a master’s degree, and 32 states ask for a doctorate. Seven states set a minimum age for audiologists, 17 states want them to be U.S. citizens, four need them to speak English well, and 19 ask for good moral character.
“Far more workers are affected by licensing than other labor market institutions like labor unions or minimum wage laws,” the researchers conclude. “Unlike these other laws, licensing mainly focuses on service professions and ones that typically offer avenues for entrepreneurship.
“Our data not only catalogs specific licensing requirements, it exposes their effects. We can now estimate, for instance, if licensing fees restrict the supply of workers. We can estimate the effect of education requirements and exams on the quality of professionals and their services. And citizenship requirements and English language proficiency are especially useful for understanding licensing’s effect on immigrants.”
