Co-authored by Kyle Doran, a Director at Social Finance.
In any given state across the country, individuals trying to improve their own economic wellbeing face a complex workforce training and licensure system. Imagine Andy, a person who wants to become a licensed heating, ventilation and air-conditioning (HVAC) contractor, for example. Based on an average of the requirements across 35 states, in order to work as an HVAC contractor, he must first gain over 1,000 cumulative days of experience and training, pay almost $400 in fees and pass two exams. This is a busy time for Andy, and in part due to his participation in this HVAC training, his income is much lower than prior to the program. Without full-time employment and the wages that come with it, transportation, childcare and other expenses become even more of a hardship, and he’s faced with the difficult decision of weighing the cost of a training program and expenses for these core necessities against the ultimate benefit of a more promising career.
Postsecondary institutions, job training programs and employers in the U.S. offer over 950,000 different kinds of credential opportunities, including professional licenses, according to Credential Engine. With this number of offered credentials, it can be difficult to determine which education and training programs will make workers competitive for employment. Moreover, it can be difficult for employers to know if a worker’s credential gives them the necessary skill set for a job.
Solutions to these realities involve making data on credentials, competencies and occupational skills fully transparent, including data on skills in greatest demand and where such skills are being taught. As more and more states work to build back a more inclusive and equitable workforce, credential transparency has come to the forefront. Particularly for licensed professions, credential transparency can provide clearer information for practitioners working to earn their license and for those already licensed professionals upskilling.
Veterans and military spouses are two groups that often face barriers to obtaining and keeping employments. Veterans often have difficulties marketing their skills for the civilian workforce as well as in translating their skills, training, education, and experience into a new field. On the other hand, military spouses have trouble with the frequent moves that are common with military families. With the increasing numbers of jobs that require an occupational licensure, it is important to lower any barriers to licensure that might further hinder these two groups from employment. Occupational licensing regulations that do not account for veterans’ skills and experiences can cause them to pay additional fees for education and training necessary for licensure that they might already have gained in the military. For military spouses, the frequent moves can make it more difficult for them to transfer their professional licenses across state lines, possibly needing to gain additional experience or pay extra fees to practice in a new state. Both instances can discourage these groups from entering the labor market, and states have been working to mitigate these effects.
Since 2019, 14 states have either established or revised universal license recognition (ULR) laws. These statutes define a framework where a state determines its unique process to grant an occupational license to an individual who already holds a license in another state or U.S. territory. ULR laws generally set less restrictive and more uniform license portability standards across most or all licensed occupations in a state. However, such laws do not offer true reciprocity (instantaneous recognition of a license from another state) or the mutual recognition found in most interstate licensing compacts. While ULR laws may require an application process and discretion by the licensing board, they have the intended effect of lowering the threshold for license portability in a state and reducing time to licensure.
Immigrants comprise approximately one in six workers in the United States. Many states, including California and Missouri, provide avenues for immigrants to earn occupational licenses. These avenues allow states to fill labor shortages in certain occupations and keep skilled in-state workers. However, many immigrants still face barriers to licensure that may prevent them from entering the workforce. Some immigrants may face a barrier understanding unfamiliar technical language in the licensing process. Immigrants also are more likely to face financial barriers that make it more difficult to complete the licensing process, which usually involves several fees.
During the pandemic, many state occupational licensing bodies encountered barriers to their regular licensing processes. Issues with mailing delays, in-person training, exams, and fee collection prompted many executive orders and regulatory and legislative actions to waive some requirements for licensure. This has been especially important for meeting workforce shortages in healthcare and providing new ways to deliver and receive services, such as the expansion of telehealth practice. Outside of healthcare, the increasing number of jobs that require a professional license and the dramatic shift to a remote workforce has presented similar challenges and made clear the need for a more streamlined licensing process.
Apprenticeships, an “earn while you learn” program with on-the-job training for future practitioners of a trade or profession, are an increasingly available pathway toward licensure in several states. According to DOL statistics, 94% of those who complete an apprenticeship program maintain employment and earn an average salary of $70,000. With such success stories, there has been a 128% increase in new apprenticeships since 2009 and 12,300 new apprenticeship programs created in the last five years. In 2021, numerous bills about apprenticeships and apprenticeship programs have been introduced in state legislatures across the country.
Around 1 in 3 American adults have been arrested before they reach 23 years of age and between 70 and 100 million Americans have a criminal record. Because a criminal record can include speeding tickets, it is no wonder this number is so high. However, a criminal record can still inhibit individuals from finding employment or being licensed in particular occupations. Occupational licensing regulations sometimes have a blanket prohibition on individuals with any criminal convictions, or “good moral character” clauses that allow a licensing board to deny a license for an arrest without conviction. This contributes to a large segment of the population being unable to work, even if their arrest or conviction occurred years prior to their application.
“The Effect of Occupational Licensing Stringency on the Teacher Quality Distribution,” a recent study sponsored by the National Bureau of Economic Research, finds stricter licensing laws diminish teacher mobility but does not meaningfully affect the quality of teachers coming from other states. The study’s findings may be particularly illuminating for states with teacher shortages, where improving pathways for out-of-state teacher licensure recognition can be useful strategy to increase teacher mobility without harming public welfare.
As states assess ways to improve the occupational licensure policy process, the use of “sunrise reviews” has garnered renewed interest. A sunrise review is a specific, data-informed analysis completed before proposed regulations are considered by a state legislature. The result is better information about the proposed benefits, and potential drawbacks, of the considered regulation. For occupational licensing policy, this review allows states to consider the economic and public safety effects that licensure affords. The Council of State Governments (CSG) has identified 14 states that maintain a process for occupational licensure sunrise reviews: Arizona, Colorado, Florida, Georgia, Hawaii, Idaho, Maine, Minnesota, Nebraska, Ohio, Vermont, Virginia, Washington and West Virginia.