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OCCUPATIONAL AND PROFESSIONAL LICENSING
1
INTRODUCTION DEREK R. SLAGLE, PH.D.
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PRESENTATION OVERVIEW
Defining Terminology
Past: Historical Overview
Present: Literature Review
Future: Next Steps
3
DEFINING TERMINOLOGY
4
3 Types of Occupational Regulation
Licensing
Certification
Registration
Synonymous
Used interchangeably
Do not differentiate in
reporting
Cannot differentiate in data
differences for certification &
licensing
5
6
LICENSING
Government credentials required of workers in certain occupations
Some ‘universally licensed’
E.g., Physicians, Lawyers
Some licensed only in certain states
State legislatures set licensing policies authorize state agencies and
regulatory boards to oversee licensing applicants & workforce
compliance 7
CERTIFICATION
Voluntary
Certificates
Provided upon exam completion
Demonstration of requisite skills/ knowledge
Certified individuals can use designated title
8
REGISTRATION
“Right-to-title”
Restricts use of profession’s title to those certified
Anyone can perform duties of profession whether certified or not
Registration with state governmental agency is required of certain occupations before occupational practice.
Occasionally, requires a surety bond or fee before undertaking professional work
Popular alternative to licensing
Appropriateness dependent upon if public likely to make improper or dangerous decisions
9
HISTORICAL DEVELOPMENT PAST
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MIDDLE AGES: THE GUILD SYSTEM
2 Types: Merchants & Craftsmen
Primary mechanisms of economic control & regulation
Established protection against competition
Controller of occupation entry
Strict standards of practice
Medieval guild systems functioned very similarly to modern professional practices
Guild rules + Local Laws
Limited number of students in training under Master
Length of training for apprentices
Controlled wages, hours, working conditions 11
ORIGINS IN AMERICA
Early 1800s
1800:
14/16 states
Medical boards
Challenges:
Societal authority over individuals
Economic tool
Rather than protection from incompetent practitioners
Licensing diminished
Medical degrees > Licenses
Early 1900s
Resurgence for medical professions
E.g., physicians, dentists, pharmacists
Medical societies bolster stature of
profession in public image
Cooperation with state in regulation of
members
More favorable view 12
PROGRESSIVE ERA: 1920S-1950S
Argument:
Improve markets
New specializations, knowledge, & technology
Difficulty for consumers to gauge quality
Licensing rarely imposed on occupation without its wishes
1950s: <5 % of workforce 13
UNIONIZATION VS LICENSING: SIMILAR BUT DIFFERENT
Similarities
1. Similar Effects on Wages
10-15% increase for licensed or unionized
2. Proportion (density) of labor force
30% at respective peaks
3. Possibility of coverage cessation
Differences
1. Distinction between licensing & union effects
Union bargaining wages reallocated profit from
shareholders to workers to workers reduce income
variation
Occupational Licensing transfers income from
consumers (through higher prices) to licensed workers
(in form of higher wages)
No explicit impact on reducing wage variations
2. Union density peaked 50 years ago
Unionization steadily decreasing; Licenses increasing
3. Ease of union decertification vs De-licensing efforts 14
GROWTH OF LICENSED WORKFORCE
15
WHY HAS LICENSING INCREASED?
1. Changes in composition of workforce
Economy shifted since 1950s
Employment shifted into services (more
likely to be licensed)
Rather than goods-producing sector
Growing share of workers in heavily licensed
occupations
2. More occupations have become licensed
over time
Licensing expanded considerably into
sectors that weren’t historically associated
Percent Licensed Over Time:
Estimated & Counterfactual
1/3
2/3
16
SHARE OF ALL LICENSED WORKERS IN 12 OCCUPATIONS WITH
MOST LICENSED WORKERS
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LITERATURE REVIEW PRESENT/ CURRENT TRENDS, ANALYSIS, THEMES
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OVERVIEW OF LITERATURE: NATIONAL & ARKANSAS
Scope
Pros & Cons
Vulnerable Populations
Workforce Migration
Sunset and/or Sunrise Legislation
De-Licensing Efforts
19
SCOPE
1993:
600 occupations in at least 1 state
Early 2000s:
800 occupations in at least 1 state
50 occupations listed in all states
20% of workforce
2017:
1,100 occupations in at least 1 state
<60 occupations listed in all states
25% of workforce 20
SCOPE: ARKANSAS
86 Licensing/ Certifying Boards and Agencies
Providing 305 different licenses, certifications, and registrations
Cover approximately 651 careers (US Department of Labor, 2017)
% to be discussed 21
US DEPARTMENT OF LABOR, CAREERSTOP CREDENTIALS CENTER:
ARKANSAS LICENSED OCCUPATIONS BY CATEGORY (2017)
Architecture & Engineering 50
Arts, Design, Entertainment, Sports, &
Media
20
Building & Grounds Cleaning &
Maintenance
8
Business & Financial Operations 41
Community & Social Service 16
Computer & Mathematical 3
Construction & Extraction 52
Education, Training, & Library 36
Farming, Fishing, & Forestry 14
Food Preparation & Service Related 16
Healthcare Practitioners & Technical 84
Healthcare Support 17
Installation, Maintenance, & Repair 37
Legal 6
Life, Physical, & Social Science 40
Management 39
Office & Administrative Support 26
Personal Care & Service 30
Production 34
Protective Services 23
Sales & Related 23
Transportation & Material Moving 36
22
NATIONWIDE: % OF WORKERS LICENSED BY OCCUPATION
23
PERCENT OF WORKFORCE LICENSED FOR ARKANSAS
(KLEINER, 2006 – USING 2000 CENSUS DATA)
Total Percentage of Workers:
345,360 licensed workers in state /1,209,260 total workers in state =
28.56% of all workers
Average state percentage: 19.9%
Number of licensed occupations:
140 for Arkansas
3rd worst
24
PERCENT OF WORKFORCE LICENSED BY STATE (2015)
(1) Iowa 30.3%
(2) Nevada 30.7%
(3) Washington 30.5%
(4) Kentucky 27.8%
[…]
(19-tie) Tennessee 23.1%
(19-tie) Mississippi 23.1%
(22)Louisiana 22.3%
(26) Missouri 21.3%
[…]
(35-tie) Arkansas 20.2%
[…]
(51) S. Carolina 12.4% 25
ARKANSAS LICENSED OCCUPATIONS BY THE NUMBERS
Most Licensed Occupations
Heavy and Tractor-Trailer Truck Drivers 139,688
Sales Agents, Securities & Commodities 108,924
Insurance Sales Agents 87,070
Office & Administrative Support Workers, All Other (Notary Public) 51,000
Registered Nurses 39,468
Kindergarten & Elementary School Teachers, Except Special Education 34,540
Nursing Assistants 30,327
Secondary School Teachers 30,000
Middle School Teachers 24,405
Construction Managers 19,486
Least Licensed Occupations
Meeting, Convention, & Event Planners 3
Forest & Conservation Workers 3
Agricultural Inspectors 7
Training & Development Specialists Total 19
Lead-based Paint Abatement Training Provider 1
Asbestos Training Provider 18
Graders & Sorters, Agricultural Products 23
Midwives 27
Acupuncturists 29
Public Address System & Other Announcers: Ring Announcers 30
26
POTENTIAL PROS
Improve quality
Protect public health & safety
Consumer information on service quality
Benefit practitioners
Encourage individuals to invest in lifelong occupational skills
Professionalization & Standardization
Creation of career paths for licensed workers
Improved pay
State’s affiliation
Legitimacy & prestige
Build community & cohesiveness within occupation
Licensing boards – revenue neutral or revenue generating
27
POTENTIAL CONS
Restricts mobility across states (hurdles, costs, & variance)
Increases costs of goods & services to consumers
Licensing reduces employment/ competition in licensed occupations higher prices
Reduce access to jobs in licensed occupations
Barriers to workers makes labor market less efficient can limit economic growth
Licensing affects who takes what job
Wages & Employment lower for unlicensed
Burdens on employers/ workers
Inconsistent, inefficient, arbitrary systems of licensing
High costs to individuals: training, education, fees, paperwork
Inhibits self-employment & innovation
Most research does not find that licensing improves quality or public health & safety
28
Balancing Act: Costs & Benefits
Do Benefits Outweigh Risks? 29
VULNERABLE POPULATIONS
Military
Military Spouses
Immigrants
Blanket exclusions for formerly incarcerated or with criminal records
Low-&-Middle Income Workers; No-or-Little education workers
Impact on a lot of ‘blue collar’ jobs 30
IMPACTED POPULATIONS: MILITARY AND MILITARY SPOUSES
Highly mobile
35% military spouses in occupations that requires licenses
Frequently relocate across state lines
10x
31
IMPACTED POPULATIONS: CONVICTS
Nationally:
Approx. 1/3 Americans have some form of criminal record (70-100 million)
Arrest or Conviction
Ineligible for large share of jobs perpetuating unstable, individual economic situations
Licensing laws often contain blanket exclusions for formerly incarcerated or criminal records
Understandable that some types of criminal convictions should disqualify applicants for certain jobs
Relevancy boards
Often take 6 months - 1 year to review applications
Arkansas has standards/ relevancy board in place* 32
STANDARDS GOVERNING RELEVANCE OF CONVICTION RECORDS
OF APPLICANTS FOR OCCUPATIONAL LICENSURE
33
IMPACTED POPULATIONS: IMMIGRANTS
Cannot apply skills to U.S. jobs since do not meet relevant licensing requirements
Individuals with considerable education, training, & work experience abroad
½ of immigrants with bachelor’s degree overqualified for current job (Hall et al., 2011)
Training & experience elsewhere do not count
34
IMPACTED POPULATIONS: LOW-AND-MIDDLE INCOME;
EDUCATION
35
AVERAGE EDUCATION OR EXPERIENCE (IN DAYS) REQUIRED FOR
LICENSE BY STATE FOR SELECTED OCCUPATIONS (2012)
(1) Hawaii 724
(2) Arkansas 689
(3) Florida 603
(4) Nevada 601
[…]
(33) Tennessee 222
(34) Missouri 220
(44) Louisiana 163
(45) Mississippi 163
[…]
49. North Dakota 132
50. Pennsylvania 113
36
BURDENSOME LICENSING REQUIREMENTS
(LICENSE TO WORK, 2017)
Study examined requirements for 102 lower income occupations for all 50 states
Arkansas licensed 72/102
Average cost of $246 in fees
642 days of education & experience
About 1 exam
Arkansas 6th most burdensome state with licensing laws
High average experience & education burdens
3rd ‘most broadly & onerously licensed state’ 37
PERSONAL & ECONOMIC FREEDOM (RUGERS & SORENS, 2013)
Economic freedom score
Only slightly negative
Occupational freedom
Limited
Extent of licensure
Standard deviation worse than nat’l avg.
Education & Experience requirements particularly onerous 38
LICENSING & WORKFORCE MOBILITY
Research: More restrictive State licensing statutes reduce migration
State-to-state
Within-state migration little impact
Analysis shows that licensed workers who relocate are 24% less likely
than unlicensed workers to move across state lines
Diminished mobility inefficiencies in labor market
Workers unable to move to jobs they are most productive at
39
DIFFERENCE IN MIGRATION RATES OF WORKERS FOR MOST VS.
LEAST LICENSED OCCUPATIONS
Most licensed
occupation 14%
lower for
migration than
average least-
licensed
occupations
20% difference
40
DECLINING MOBILITY IN U.S. LABOR FORCE
41
DISTANCE LEARNING & REMOTE WORK
Remote Work
Telework offers important opportunities for licensed practitioners and clients
Licensure can be barrier to growth & development
Some States are starting to adapt licensing requirements for telework (mainly healthcare & emergency mgt.)
Some practitioners need licenses in every state
Jurisdictions?
Distance Learning
Distance education dramatic growth
Particularly utilized by professionals for
continuing education
Occupational licensing boards may
restrict participation in distance
education
Additional accreditation steps for
students 42
SCOPE OF PRACTICE
Not only if practitioner can practice but what services provided as part
of practice
Scope of Practice laws vary from state to state
Even though nationwide education standards and examinations
Vary for complementary & sometimes overlapping or competing services
E.g.: Dentists & Dental Hygienists; Doctors & Advanced Practice
Nurses; Architects & Interior Designers; Engineers & Architects;
Electricians & Electrical Engineers 43
SUNRISE OR SUNSET REVIEWS/LEGISLATION
‘Sunrise’ or ‘Sunset’ reviews of occupational licensure
Typically Cost-Benefit Analysis
Sunset provisions – clauses embedded in legislation; expiration dates; LegislativeExecutive
Literature:
Sunrise more successful at limiting growth than Sunset are at removing unnecessary licenses
Sunset committees usually recommend continuation of licensing
Rarely repeal licenses
When recommend repeal Legislatures usually ignore rec.
Sunset reviews
Adapt licensing over time; review complaints lodged w/ board; value of license
Practitioners not consumers usually file complaints
44
STATES WITH SUNRISE AND/OR SUNSET LEGISLATION
45
DE-LICENSING EFFORTS
8 instances of de-licensing
over past 40 years
4
46
FUTURE DIRECTIONS?
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SEEMINGLY BIPARTISAN ISSUE
Obama Administration
U.S. Congress
Trump Administration
48
RECOMMENDATIONS FOR SYSTEMATIZATION & HARMONIZATION
OF OCCUPATIONAL LICENSING REGULATION (KLEINER, 2015)
Cost-Benefit Analysis to Evaluate Occupational Licensing:
State governments in coordination with occupational associations, should perform analyses on new and existing regulations for occupational licensing.
Certification Policies as a Substitute for Licensing:
When costs of licensing exceed benefits, states would consider transferring away from licensing to lesser forms of regulation (see Table 1), or even no regulation at all.
State Reciprocity:
State reciprocity agreements for acceptance of occupational licenses by other states with similar requirements for licensing.
Federal Engagement to Promote Best Practices:
The federal government would establish a federal interagency group to promote best practices for occupational regulation. States would then be encouraged to apply for federal grants for evaluation and improvement for occupational licensing systems. 49
BEST PRACTICE RECOMMENDATIONS (2017): DEPARTMENT OF TREASURY OFFICE OF ECONOMIC POLICY; COUNCIL OF ECONOMIC ADVISORS; DEPARTMENT OF LABOR
1. Limiting licensing requirements
To those that address legitimate public
health & safety concerns
Ease burden of licensing on workers
2. Apply results of cost-benefit
assessments
To reduce number of unnecessary or
overly-restrictive licenses
3. Harmonize regulatory requirement
across states, as much as possible
When appropriate enter into inter-State
compacts that recognize licenses from
other states to increase mobility of
skilled workers
4. Allow practitioners to offer services
to full extent of current competency
Ensure qualified workers are able to
offer services 50
OKLAHOMA OCCUPATIONAL TASK FORCE RECOMMENDATIONS
1. Creation of an Independent Commission on occupational licensing tasked with
reviewing all occupational licenses at the state.
2. Legislative Sunset Review Committee and process for review of licensing boards.
3. Creation of a new or assigning an existing committee Legislative Committee with
Jurisdiction for License Formation;.
4. Centralized jurisdiction under one agency, preferably the Department of Labor, for
oversight and centralized data collection.
5. Continuance of database created through taskforce.
6. Executive order requiring state agencies and boards to report full schedule of fees
and educational requirements for issued licenses.
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OKLAHOMA TASK FORCE RECOMMENDATIONS (CONT.)
7. Review of board composition to make sure boards are not only comprised of
market participants
8. Second stage review through creation of an independent commission or continuance
of the Task Force.
9. Focus on reciprocity issues through legislation specifically from the military, military
spouses, and those considered High-priority or Low-risk.
10.Degrees of licensing to reduce expensive or burdensome licensing requirements
11.Third-party certification as alternative means to prevent fraud
12.Criminal justice reform through modified licenses or narrowly customizing
prohibitions for certain felonies.
52
SYSTEMIC ANALYSIS & DATABASE CREATION
53
SURVEY INSTRUMENT
54
