Occupational licenses, government permission slips, are viewed as tools that provide consumer protection because they are believed to weed out those who are not qualified for a particular occupation while leaving those who are.
This view should no longer be accepted. To see why just look at how states grappled with COVID-19.
To fight COVID-19, states allowed doctors to practice across state lines without getting new occupational licenses for each state of practice. More than 45 states enacted this universal medical license recognition.
States allowed this change because it would expand access to health care. Doctors not having to get a new license to treat patients in different states allowed for care to be provided more efficiently.
This case study provides insight into how current occupational licensing laws are harmful and why universal occupational licensing should become commonplace
Occupational licenses are stunting the workforce, reducing efficiency, and negatively impacting consumers. Economists estimate that licensing in the United States causes “2.8 million fewer jobs” and “costs consumers $203 billion annually.”
As these government permission slips impose barriers to entry for certain occupations, licensing requirements are reducing the number of available employees for various occupations. The devastating effects of this are being particularly felt within Utah, as the state is facing a labor shortage.
Economic protectionism is also expanded under current licensing laws. Industries require occupational licenses because it makes entrance into their field more exclusive, allowing industry members to charge higher prices. Economic protectionism hurts the consumers and neglects the purpose of occupational licenses — the health and safety of the public.
However, things may be changing. Gov. Spencer Cox has made it a priority to reform occupational licensing. The governor’s first executive order even required state agencies to review all occupational licenses to ensure they are truly necessary and are not outdated or incomplete.
While this is an important first step and should be applauded, ideally, Utah and other states will pursue universal occupational licensing. This form of occupational licensing nullifies many of the negative consequences associated with current occupational licensing laws.
Universal licensing refers to a state honoring an occupational license obtained in another state if an individual meets common-sense standards in the new state for which they are seeking a license.
This is beneficial as it will make it more accessible for individuals to pursue jobs in states outside of their current residence. This could create an influx of workers in needy states — such as Utah — and by doing so, greatly reduce labor shortages.
Universal licensing recognition can also benefit consumers by reducing the cost of services. When the government demands a worker’s time and money to enter a profession, the cost of doing business rises. Occupational licenses cost both money and time to obtain. Therefore, with each new license, someone must obtain the cost of doing business grows higher. When states recognize licenses from other states, the cost of doing business decreases, thus decreasing the prices of services.
Two bills, both sponsored by Sen. Curtis Bramble, in this legislative session, align with the governor’s initiative and will move Utah closer to universal occupational licensing.
Senate Bill 16 will establish the Occupational and Professional Licensure Review Office (OPLRO). The OPLRO will conduct a review for each application that seeks to newly regulate an occupation and review each occupation that requires a license.
Senate Bill 43 would allow the Utah Division of Occupational and Professional Licensing to issue an occupational license to a person who has come to Utah internationally or from a different state.
Issuing a license to these individuals will occur if they have at least one year of experience practicing the occupation they are seeking licensing for, it has been determined that their education experience and skills demonstrate competency, or if their previous jurisdictions licensing requirements were like those in Utah.
Senate Bills 16 and 43 must be supported. They negate the consequences of current licensing laws by bolstering the free market. Which, supported by universal licensing, provides a better indication of competency within a profession than restrictive government permission slips.
Benjamin Shelton is a policy fellow at Libertas Institute, a nonprofit think tank based in Lehi Utah.