Congress Urged to Help Reform State Occupational Licensing

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By Tyrone Richardson

A group of witnesses Feb. 27 suggested congressional action to help remove what they described as occupational licensing requirements thwarting business and job growth.

They joined ongoing calls for reforming states’ occupational licensing, a bipartisan response that has included support from Labor Secretary Alexander Acosta.

“Licensure acts as a barrier to entry for low and middle-income Americans seeking to enter new professions,” C. Jarrett Dieterle, a senior fellow at R Street Institute in Washington, told a House panel. “It is these populations that are least able to overcome the high fees and the burdensome educational requirements that many licenses mandate. Licensing can also hurt entrepreneurs and small businesses trying to enter into new markets, all the while, protecting incumbent businesses.”

The Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access hearing adds to ongoing discussions about the need to reverse a growing tide of state occupational licensing requirements for crafts ranging from barbering and beauticians to plumbing and day care workers. The hearing comes as the Federal Trade Commission has formed the Economic Liberty Task Force to find solutions. There’s also legislation floated in Congress to address the issue.

Advocates for reform have cited issues as underemployment and unemployment stemming from costly and burdensome state licensing requirements. Acosta last year urged states to look at potentially unnecessary license requirements and eliminate or streamline them.

The Labor Department did not immediately respond to Bloomberg Law’s request for comment.

Panel Urged to Lessen Job Barriers

The witnesses Feb. 27 described barriers that lessen chances for workplace opportunities, citing impacts on populations like minorities and low-income workers. The group suggested possible congressional solutions like supporting FTC actions, encouraging scholarships to lessen costs for workers, encouraging trade associations to review licensing, and shifting to new technology like online courses.

“Technology, over time, can help with that process,” said Keith Hall, president and CEO of the National Association for the Self-Employed. “That can help with overall costs.”

Subcommittee chairman Rep. Dave Brat (R-Va.) cited statistics saying the percentage of the nation’s workforce that requires an occupational license is about 33 percent today, up from 5 percent in the 1950s.

“Although some occupations can be dangerous and need specialized education, research shows that the amount of training required for a license almost never matches the risk of the occupation,” he said. He also cited inconsistencies between costs and requirements between states.

“But one of the most telling statistics about licensing is that while there are 1,100 occupations in the United States that are licensed in at least one state, only 60 require a license in all 50 states,” he said. “This inconsistency hurts worker mobility and most importantly, small businesses.”

Federal Actions

The hearing comes amid legislation floated to reel in state’s occupational license requirements.

This includes the bipartisan bill the New HOPE Act (H.R. 2155, S. 945), which would amend the Carl D. Perkins Career and Technical Education Act to authorize funds to identify and eliminate excessive occupational licenses.

Last Congress, Brat cosponsored the ALLOW Act, which would limit the creation of license requirements to those circumstances in which it is the least restrictive means of protecting public health, safety, and welfare. The measure did not make it out of committee.

It was not immediately known Feb. 27 if he would reintroduce that legislation this Congress.

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