This op-ed was originally published in Daily Herald on January 6, 2023.
In Utah and across the country, chances are you need the government’s permission to work in the occupation of your dreams. Government permission slips, or occupational licenses, grant people the ability to call themselves and perform work in various occupations.
Obtaining an occupational license can be extremely beneficial to an individual’s economic standing. Obtaining an occupational license may positively impact an individual’s salary by 18 percent. This group also had longer job tenure and lower incidences of being subjected to part-time work than those without an occupational license.
Unfortunately, gaining an occupational license is often a challenging process. In fact, occupational licensing has historically been criticized because it enacts considerable barriers that restrict qualified individuals from entering the workforce. These barriers include significant licensing fees, education requirements, and experiential requirements. Such time-consuming and expensive requirements can limit who has the ability to achieve a license. In addition to these barriers, occupational licensing may also be impossible or significantly challenging to receive if you are an immigrant, ex-offender, minority, or are less financially well off.
The barriers and potential difficulties of receiving an occupational license have immense consequences. Not only can being unable to obtain an occupational license block families and individuals from their desired economic opportunities and mobility, but it can also play a role in increasing consumer prices, decreasing consumer choice, and creating detrimental labor shortages.
Because of the very real role occupational licensing has on people’s lives the Institute for Justice (IJ), a nonprofit public interest law firm, has tracked the progress of all fifty states in combating harmful and overly restrictive occupational licensing laws and published their results in their annual License to Work report. This report expressly provides a picture of state licensing requirements for 102 lower-income occupations across all fifty states, the District of Columbia, and for the first time Puerto Rico.
Recently, IJ released this year’s third edition of the report.
The Bad News
The report clearly outlines a need for continued occupational licensing reform across the country. The data provided demonstrates that occupational licensing is still a common form of government regulation that has burdensome and detrimental impacts on the lives of everyday people.
Some of the notable, troubling data from the report includes:
The average requirements to obtain an occupational license are 362 days lost to education and experience, passing at least one exam, and paying $295 in fees.
Just 12 percent of the 102 studied occupations are licensed universally. This means workers practicing the other 88 percent of occupations may have a difficult time moving states or expanding their practices.
Licensing burdens do not always appear aligned with occupational risks. Workers in 71 occupations, including all the barbering and beauty occupations, face greater average burdens than entry-level emergency medical technicians.
Licensing may cost the American economy between $184 billion and $197 billion annually.
The Good News
While there is clearly still work to be done, the report did find positive trends within occupational licensing that should be continued and expanded upon. These trends include:
Between 2017 and 2022, states created sixteen new licenses across the 102 occupations but eliminated twenty-six. This reverses a trend of the number of occupational licenses increasing.
Nearly 20 percent of licenses became less burdensome.
Average days lost to education and experience requirements fell by twenty-two days.
Fewer states added licenses than removed them.
What About Utah?
When Utah is specifically isolated, with License to Work, it is clear that the state continues to make laudable progress toward occupational licensing reform, but there is still room for improvement.
Utah currently licenses 64 of the 102 occupations IJ reviewed. The licensing processes of these occupations made Utah the second-least burdensome state when it came to licensing. This is a thirty-six-spot improvement from 2017. Yet despite this massive improvement when looking at the burdensomeness of licensing in the state, Utah ranked twenty-sixth overall when compiling data about both the number of licenses and the average burdens.
Other changes in the state worth highlighting include:
No new licenses were created.
Licensing for taxi drivers and chauffeurs were removed.
Fees charged for licensees usually decreased.
Days lost to education and experience decreased for thirty-eight occupations.
What can we do to keep improving?
In order to keep improving Utah’s ranking in the License to Work report and continuously make the state’s labor market fair and free of needless regulation, Utah should continue pursuing occupational licensing reform.
Specifically, the state must continue to repeal needless licenses, reduce arbitrary licensing requirements, and scrutinize any proposed new licensing for its necessity.
Policy Associate
Ben was a Policy Associate at Libertas Institute.