Occupational licensing

Occupational licensing is a requirement that people hold a government-issued license to work in particular jobs. It covers professions such as doctors, lawyers and nurses, and also barbers, cosmetologists, florists, interior designers and many others. Requirements may include education or training hours, exams, fees and background checks, and are set mostly by states and enforced by licensing boards, often composed of practitioners.

The share of U.S. workers who need a license rose from about 5 percent in the 1950s to about a quarter in recent decades. Supporters say that licensing protects the public from harm and ensures quality in fields where errors are costly. Critics, including libertarian and conservative groups such as the Institute for Justice, and officials in the Obama and Trump administrations, argue that many requirements are excessive, protect incumbents from competition (a form of regulatory capture), raise prices and impede mobility, since licenses often do not transfer across states, and burden people with criminal records.

Reforms include universal recognition of out-of-state licenses, sunset reviews, narrowing requirements and allowing alternatives such as certification. Courts have mostly upheld licensing under rational basis review, although some state courts have applied closer scrutiny. Many states have enacted reforms in recent years, a rare area of bipartisan agreement. It is related to deregulation.