The Rise of Occupational Licensing

I’ve written about occupational licensing and its negative effects on economic mobility before. In May 2016,

the Bureau of Labor Statistics released its first-ever data on certification and licenses, providing the most comprehensive and reliable look to date at occupational licensing in the United States. In 2015, over 22 percent of U.S. workers held an occupational license at the State, Federal, or local level, while around 26 percent held a license or a certificate. While licensing and certification seek to ensure that workers have the necessary qualifications, especially for occupations impacting consumer safety and well-being, overly-broad application of licensing requirements can create costly and unnecessary barriers to entering a profession. Licensing can lead to higher wages for those able to obtain a license, but can also lead to inefficiency and unfairness, including reducing employment opportunities and depressing wages for excluded workers, reducing workers’ mobility across State lines, and increasing costs for consumers. 

Here are some of the highlights from the data:

  • Nearly one-quarter of U.S. workers require a license to do their jobs.

Share of Workers with an Occupational License

  • About two-thirds of the growth in licensing over time stems from an increase in the number of professions that require a license.

Percent Licensed Over Time: Estimated and Counterfactual

  • While licensing is more prevalent in high-income professions such as healthcare and law, it is common in many middle- and lower-income professions as well.

Percent Licensed by Occupation Group

  • Unlicensed workers earn less than licensed workers in the same occupation with similar demographics and educational attainment, and the wage gap is similar across high and low-wage occupations.

Hourly Wages of Licensed and Unlicensed Workers By Occupation


There’s more. Check out the entire White House post.