The U.S. Bureau of Labor Statistics estimates that the number of licensed occupations has risen from 5 percent of the U.S. workforce in the 1950s to about a quarter of the workforce today. Navigating the various state licensing processes can pose a significant challenge for workers due to different rules, regulations, fee structures and continuing education requirements. This panel looked at the rising use of occupational licensure compacts, particularly in the health care sector, to achieve professional licensure portability and reciprocity and the potential impacts on America’s workforce.
Scott Majors, Executive Director, Kentucky Board of Physical Therapy
Majors has served as executive director for the Kentucky Board of Physical Therapy since 2012. He currently serves as Kentucky’s delegate to the Physical Therapy Licensure Compact Commission. Earlier this year he was elected to serve as a member of the Compact Commission’s Executive Board, and he has been a member of the Commission’s Rules and Bylaws Committee since its inception. Majors came to the Physical Therapy Board from Kentucky’s Judicial Conduct Commission where he served as its executive secretary. He also previously served as prosecuting attorney for the Kentucky Board of Nursing. He has over 30 years of experience working in state government with administrative boards, agencies and commissions, with a focus placed on licensing and regulation, disciplinary procedures, administrative adjudication, and professional ethics.
W. Daniel Manz
Manz served for 25 years as the Vermont Department of Health’s emergency medical services director and the operations and logistics administrator with Vermont’s Office of Public Health Preparedness and EMS. He went on to serve as the executive director of Essex Rescue for five years. He is currently involved in championing the 2018 update to the National EMS Scope of Practice Model and as of July 1, 2018 has been supporting the implementation of the REPLICA EMS Compact. He is a commissioner on Vermont Public Safety Broadband Commission and also the vice-president of the Vermont Ambulance Association.
Joey Ridenour, Executive Director, Arizona State Board of Nursing
Ridenour’s prior experience includes over ten years as chief nursing officer at a large public hospital, Maricopa Health System. She found her greatest passion to be nursing regulation and served as past president of the Arizona State Board of Nursing ten years prior to being appointed as executive director in 1995. She has also served on the NCSBN Board of Directors and as president for four years. She has served as chair on five NCSBN committees and is the current chair of the NLC Rules Committee. She had been a member of the original NLC since 2002 and served on the NLC Executive Committee for seven years and as chair for four years.
Diana Shepard , Executive Director, Board of Osteopathic Medicine
Shepard comes from a background in hospital administration. She serves on the Board of Directors of Administrators in Medicine (AIM). She is the AIM Southern representative, which includes Alabama, Florida (MD & DO boards), Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee (MD & DO boards), Virgin Islands, Virginia, and West Virginia (MD & DO boards).
On November 28-30, the states a part of the occupational licensing policy learning consortium convened for the second annual meeting in Clearwater, Florida. The state teams had the opportunity to focus on four population groups who are disproportionately affected by licensure—individuals with criminal records, veterans and military spouses, dislocated workers and immigrants with work authorization. License portability, reciprocity, and interstate compacts were also major topics. States had the opportunity to connect with and learn from fellow consortium states, as well as hear from states outside of the consortium that have taken action on occupational licensure including Nebraska and Michigan.
New funding allowed for four new states to participate in this year’s consortium meeting. Idaho, New Hampshire, North Dakota, and Vermont formed state teams made up of legislators, regulatory agencies, and governor’s staff and joined the original 11 states in Clearwater to begin action planning their licensure reform. These states who recently came aboard the project will be part of the consortium going forward.
CSG was also able to expand existing state teams to include more regulatory board members. Licensure reform is a challenging policy area with many competing interests. Bringing together all stakeholders is something CSG wanted to accomplish as a part of this effort. Pursuing licensure reform without input from the licensure boards is not something states have had much success with. In order to engage more regulatory agencies, CSG used additional funding to expand state teams to include these key stakeholders.
The focus on particular reforms from the consortium states as discussed at the meeting ranges widely from sunrise/sunset review, interstate compacts, communications/marketing plans, board consolidation, data collection/standardization, and laws for military families.
One additional point of discussion for the state teams was developing a transition plan for states with outgoing governors and legislators. With state teams being made up heavily of legislators and governor staff, some teams are needing to come up with a plan maintain momentum once these new state leaders take office. The partners at CSG, NCSL, and NGA have committed to developing a transitional memo that states can request which will explain the project and ask for support from the newly elected official.
The consortium will formally meet one more time in the summer of 2019, but the project partners hope this is just the beginning of state occupational licensing reform.
Vermont Deputy Secretary of State Chris Winters said, “This was the best conference I’ve ever been a part of. I was so glad to be able to contribute, and was also really proud of my Vermont team and their focus. This conference has energized them.”
Each consortium state has accomplished things throughout this project, but the latest consortium meeting in Clearwater was a great time for states to reset focus, refine vision, and energize to pursue common sense licensure reform.
“Military spouses serve alongside our nation’s servicemen and women,” U.S. Secretary of Labor Alexander Acosta said in a press release announcing the webpage. “States should act to remove excessive regulatory barriers to work so that our military spouses can help support their families. This new site highlights states’ efforts to help military spouses secure good, family-sustaining jobs.”
Military spouses can use the portal to search for state laws, regulations and guidelines on occupational licensing. The website also includes information on how occupational licenses can be recognized from one state to another. Many states have specific standards for military spouses to encourage the obtainment of a license in their state. Methodologies range from endorsement, expediting, temporary licenses or a variety of combinations.
The new tool provides spouses with information they need to continue their careers following relocation to another state. Finding solutions for veterans and military families to barriers related to occupational licensing is a priority of CSG. A current CSG project funded by the Department of Labor, Occupational Licensing: Assessing State Policy and Practice, prioritizes veterans and military spouses as a target population for licensure reform.
CSG’s National Center for Interstate Compacts is also a vital resource for military families looking for reciprocity of licensure. Compacts vary in authority and structure based on the occupation but are a proven best-practice for enhancing reciprocity among states in occupational licensing.
A commonly cited argument for occupational licensing reform states that licensing results in restricted employment growth and higher wages for licensed workers, which in turn increases consumer costs. Higher wages benefit licensed workers, but wage disparity leads to inefficiency and unfairness, including reducing employment opportunities and depressing wages for excluded workers.
However, CSG’s analysis of data from the Bureau of Labor Statistics (BLS) finds no evidence that licensing has any effect at all on wages and employment growth for electricians and massage therapists. Using original CSG time-series licensing data along with occupational employment data from BLS’ Occupational Employment Statistics (OES) program, this analysis compares wage trends before and after licensure, to a control state that does not license the occupation at all. Plotting wages for the licensed state and the control state, with hourly median wages on the vertical axis and year on the horizontal axis, while drawing a vertical line at the year of initial licensure shows any potential licensing effect. Deviations from wage trends prior to licensure can be attributed to licensing if the effect is similar across several state comparisons.
(SEE ATTACHMENT FOR PLOTTED DATA)
When comparing the time series data plotted for licensed and non-licensed states, there is no evidence that these occupations becoming licensed has an effect on wages and employment. The result is most convincing for electricians. When looking at the plotted time series data, the trend lines barely changes at all upon initial licensure. If a licensing effect did exist, we would expect the line to trend upward for wages and downward for employment after a state licenses electricians. However, when comparing with the control states that do not license, the trend lines hardly deviates at all upon initial licensure. This result is consistent across all three sets of state comparisons.
The result seems to hold even for an occupation within an entirely different industry. The trend lines for massage therapists are more erratic, but still do not seem to support a possible licensing effect. There must be other effects at work causing the wage and employment lines to shift, but these shifts do not occur in sync with the treatment state adopting a license requirement.
If most economists agree with the assumption that occupational licensing increases wages for licensed workers and decreases what are some possible explanations for this result? It may be the case that a licensing effect takes many years to be seen. The increase in wages and decrease in employment growth could be a slow, gradual process over the course of many years that eventually restricts entrants into the profession, but does not do so initially.
Secondly perhaps the licensing requirements adopted are not severe enough to deter an aspiring practitioner from entering the occupation.
The above tables from CSG, NCSL, and NGA’s Occupational Licensing Database outline the licensing requirements for electricians and massage therapist in each treatment state where a license was adopted. Based on previous literature, if a licensing effect did exist for these occupations, you would expect the effect to be even more noticeable in the graphs for Nebraska and Iowa. The training and experience requirements for these two states are double the requirements for the other states who also recently adopted a license, yet the trend lines do not suggest that a more severe licensing effect exists.
This result is important to policy makers who are looking for new ways to grow their state’s economy. Occupational licensing reform has been a workforce priority of the two most recent presidential administrations with President Obama’s administration releasing a 76-page policy framework for state officials, and the Trump administration awarding large grants to enhance state occupational licensing portability of which CSG was a co-recipient.
Enhancing portability of state licensing and creating more a more equitable system for vulnerable populations like veterans and military families, people with criminal records, immigrants, and long-term unemployed workers is a crucial need. However, it is not clear from this evidence that deregulation will have the economic impacts that some believe.
If the result of a state adopting a license for certain occupations is negligible for these economic indicators, perhaps policymakers should focus their efforts on things other than deregulation when figuring out how to grow their state economies. Some argue that removing these licensing barriers will result in an influx of new practitioners into the occupation which will stimulate job growth. The evidence from CSG’s analysis does not show that this would be the case. If an occupation becoming licensed does not affect wages or employment, then deregulating an occupation likely won’t affect these outcomes either.
Utah’s Department of Commerce issued a 2018 legislative brief that includes a comprehensive and proactive approach to reducing occupational licensing constraints and barriers. Utah is part of CSG’s occupational licensing project, which includes an 11-state consortium that includes Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maryland, Nevada, Utah and Wisconsin.
CSG started the occupational licensure project in partnership with the National Conference of State Legislatures and the National Governors Association. Project funding is supported through a $7.5 million grant from the U.S. Department of Labor, or DOL. The DOL project scope focuses on target populations of military spouses and children, immigrants with work authorization, people with criminal records, and unemployed and dislocated workers.
Each state selected their choice of occupational licensure focus from the DOL’s list of 34 target occupations and drafted an action plan detailing their overall strategies in achieving project performance goals. The DOL’s projects goals are:
To improve their understanding of occupational licensure issues and best practices
To examine existing licensing policies in their state
To identify current policies that create unnecessary barriers to labor market entry
To create an action plan that focuses on removing barriers to labor market entry and improves portability and reciprocity for select occupations
The Utah Division of Occupational and Professional Licensing, or DOPL, is in a continuous effort to minimize unnecessary regulation while promoting public safety and commerce. The 2018 general session passed several laws detailing their accomplishment of both DOL project goals and their own mission.
H.B. 170 Licensing Fee Waiver Amendments
License fee waivers for full-time active duty service members of the U.S. Armed Forces, National Guard and Reserve.
S.B. 227 Licensing Standards for Military Spouses
Expands exemption from licensure for military spouses to include all licensed professions within the state.
S.B. 60 License Hold for Military Service
Authorizes fee waivers associated with renewal of an inactive license for members of the U.S. Armed Forces, National Guard and Reserve.
H.B. 37 Occupational and Professional Licensing Amendments
Modifies and reduces required training, exams, experience and hours of training for various occupations with minimal impact on public safety; removes nonviolent felony restriction for nursing professionals to a case by case basis.
H.B. 310 Professional Licensing Amendments
Reduces licensing fees for contractors and repeals the Lien Recovery Fund leaving the State Construction Registry Program as a single point for oversight of lien law.
H.B. 63 Cosmetology an Associated Professions Amendment
Allows required exams to be administered in applicant’s native language.
S.B. 15 Environmental Health Scientists Act Amendments
Allows nonaccredited programs to qualify for education requirements when both programs are substantially equivalent.
S.B. 197 Private Security Amendments
Significantly reduces required training and education for licensing.
H.B. 200 Dentists Licensing Amendments
Removes artificial barriers and expands the list of regional dental clinical license exams accepted.
Facilitating Worker Mobility
H.B. 37 Occupational and Professional Licensing Amendments
Modifies language to allow for expanded implementation of multistate licensure compacts.
The current economic cost of professional and occupational regulation directly impacts one quarter1 of the working population in the U.S. The number of professions or occupations requiring a government license is nearly one quarter2 of the current working population. The majority3 of this increase has been the result of the increasing number of professions or occupations requiring a license. Recent domestic evidence also shows that states vary dramatically in their rates of licensure, ranging from 12 percent to 33 percent.
About the Author Adam Parfitt is executive director of the Council on Licensure, Enforcement and Regulation (CLEAR), a position he has held for the last ten years. Previously he served as the organization’s Director of International Relations. Prior to his time with CLEAR. Adam worked with several associations of state government officials.
Professional and occupational regulation is predominantly a state function, undertaken and protected under Article X of the U.S. Constitution. Article X grants states the authority to regulate activities affecting the health, safety and welfare of their citizens. Practitioner disciplinary matters follow each state’s administrative procedures act. Exceptions to this state oversight are the growing numbers of municipal-level licensing and professionals employed by the federal government to work within state borders.
Recent Scrutiny Research suggests that nearly one quarter4 of the working population in the U.S. requires a government license for their profession or occupation, a number that has risen from 5 percent in the 1950s. The vast majority5of this increase has been the result of the increasing number of professions or occupations requiring a license. Meanwhile, economists suggest that the wage effect of professional and occupational licensing can be as high as 15 percent.6 Little wonder, then, that close attention is being paid to this policy lever, its implications and implementation.
Indicative of the higher profile enjoyed by professional and occupational regulation, a recent White House press release7 called for reforms to the existing system, stating:
“While licensing can offer important health and safety protections to consumers, as well as benefits to workers, the current system often requires unnecessary training, lengthy delays, or high fees. This can in turn artificially create higher costs for consumers and prohibit skilled American workers like florists or hairdressers from entering jobs in which they could otherwise excel.”
Recent developments have focused upon the following perceived shortcomings within the system:
The scale and growth in the number of professions and occupations affected by professional or occupational regulation, in addition to the disparity in approaches across the states;
Perceived attendant restrictions on professional mobility, affecting both civilian populations and military families (the latter disproportionately affected by deployments to military bases in different jurisdictions);
Applicability related to new working patterns (including telework and telepractice);
Issues of fairness, related particularly to those with qualifications from foreign institutions, as well as those with a criminal record;
The availability of consumer information about providers and practitioners; and
Issues related to oversight and broader governance.
Scale and Growth of Professional and Occupational Regulation A recently published list of licensing best practices8provides a guide to the focus of future reforms in the field:
Ensure that Licensing Restrictions are Closely Targeted to Protecting Public Health and Safety, and are Not Overly Broad or Burdensome
1. In cases where public health and safety concerns are mild, consider using alternative systems that are less restrictive than licensing, such as voluntary state certification (“right-to-title”) or registration (filing basic information with a state registry).
2. Make sure that substantive requirements of licensing (e.g., education and experience requirements) are closely tied to public health and safety concerns.
3. Minimize procedural burdens of acquiring a license, in terms of fees, complexity of requirements, processing time and paperwork.
4. Where licensure is deemed appropriate, allow all licensed professionals to provide services fully of their current competency, even if this means that multiple professions provide overlapping services.
5. Review licensing requirements for the formerly incarcerated, immigrants and veterans to ensure that licensing laws do not prevent qualified individuals from securing employment opportunities, while still providing appropriate protections for consumers.
The desire to ensure that regulation is proportionate and reflective of the risk to the public is echoed elsewhere, notably in a recent report9 from the Professional Standards Authority in the U.K., which developed a “continuum of assurance” as part of efforts to provide “a methodology for assessing and assuring occupational risk of harm.”10
The Professional Standards Authority’s model contains two stages: profiling the risk of harm that results from the practice of a profession; and determining the external risk factors that may exist. The latter includes the numbers of practitioners and potential clients, methods by which the risk can be managed (including through the use of technology), the economic cost (including effects on cost and supply), innovation, perceived risk and unintended consequences.
Having been encouraged to consider alternative policy levers, some states have attempted to deregulate, or de-license, existing professions and occupations. Research suggests11 however, that such initiatives are rarely successful. A recent Bureau of Labor Statistics report commented that “In nearly every instance that we analyzed, de-licensing and de-licensing attempts have been met not only with stiff resistance but also usually (when successful) with a movement to reinstitute licensing. Clearly, these results reflect the lobbying power of the occupations in question and their professional associations.”12 The report goes on to suggest additional reasons for such resistance, including the likelihood that the costs (of delicensing) to members of licensed practitioners is high, at the same time as the benefits to the public are arguably widespread, but limited. Other possibilities include the unwillingness of state legislatures to deny the states a source of revenue, given that most regulatory boards are, at a minimum, self-sustaining. While sunset laws exist in a variety of states, historically many appear reluctant to recommend de-licensure, or find legislatures reluctant to act upon such recommendations.
Concerns about the economic cost of professional and occupational regulation are not confined to domestic governments and think tanks. Recent years have seen the Organization for Economic Cooperation and Development, or OECD, produce significant work related to this topic. Among the initiatives has been the development of a Services Trade Restrictiveness Index,13 which “provides policy makers and negotiators with information and measurement tools to open up international trade in services and negotiate international trade agreements. The STRI indices take the value from 0 to 1, where 0 is completely open and 1 is completely closed.”
State Variations in Regulatory Practice Recent domestic evidence also shows that states vary dramatically in their rates of licensure, ranging from a low of 12 percent of workers in South Carolina to 33 percent in Iowa. Such significant differences in licensing prevalence are frequently cited by opponents of licensure, who suggest that jurisdictions are not treating occupations equivalently, to the detriment of both market participants and consumers. A Reason Foundation report14 from 2007 tabulated each state’s licensing requirements by occupation. The report found that on average, states require licenses for 92 occupations. A separate report by Institute for Justice compared licensing requirements for low and moderate-income occupations that are licensed in at least one state. This report found that 15 occupations were licensed in 40 states or more, with the average occupation being licensed in only 22 states.15
This variation is further demonstrated in Table A, indicating the percentage of workers licensed in each state. While a large number of states fall within the 20 to 25 percent range, three states license in excess of 30 percent of their workforce, while five states license fewer than 15 percent.
Supreme Court Case: North Carolina State Board of Dental Examiners v. Federal Trade Commission The implications of a recent Supreme Court case16are slowly becoming evident with occupational regulators considering the potential need to make likely significant changes to their regulatory arrangements, such as:
Requiring public member majorities on regulatory boards
Multi-party board membership
Providing umbrella boards with policy oversight
Establishing an independent review board to oversee rulemaking
Creating majority public review bodies for scope of practice actions
Making boards advisory only
Expanding the powers of sunrise/sunset review
Giving attorneys general additional oversight powers.17
Former California Attorney General Kamala Harris summarized the Supreme Court case as follows:
The North Carolina Board of Dental Examiners was established under North Carolina law and charged with administering a licensing system for dentists. A majority of the members of the board are themselves practicing dentists. North Carolina statutes delegate authority to the dental board to regulate the practice of dentistry, but did not expressly provide that teeth whitening was within the scope of the practice of dentistry. Following complaints by dentists that non-dentists were performing teeth-whitening services for low prices, the dental board conducted an investigation. The board subsequently issued cease and desist letters to dozens of teeth-whitening outfits, as well as to some owners of shopping malls where teeth-whiteners operated. The effect on the teeth-whitening market in North Carolina was dramatic, and the Federal Trade Commission took action. In defense to antitrust charges, the dental board argues that, as a state agency, it was immune from liability under the federal anti-trust laws. The Supreme Court rejected that argument, holding that a state board on which a controlling number of decision-makers are active market participants must show that it is subject to “active supervision” in order to claim immunity.”18
In response, states have taken a variety of steps:
California’s attorney general provided guidance19 about what should be considered “active supervision” for the purposes of the state action immunity doctrine, and identified measures that could be taken to guard against antitrust liability for board members. The opinion identified possible steps, including changing the composition of boards, adding additional supervision by state officials, reducing exposure for damages claims, and ensuring board members receive legal indemnification and antitrust training.
In Oklahoma, an executive order was issued20 which required those state boards with a majority of members who are active market participants in the occupation or profession directly or indirectly controlled by the board, to submit each non-rulemaking action to the Office of the Attorney General for review and analysis. Where the attorney general concludes the board action may violate law, the board must defer or reconsider the proposed action.21
In North Carolina, the General Assembly’s Program Evaluation Division, or PED, reviewed both structure and operation of the 55 independent occupational licensing boards. The ensuing report22stated that there was insufficient state-level oversight to ensure efficient and effective public protection, recommending a legislative review of several occupational licensing boards’ authority and the consolidation of several others.
Massachusetts Gov. Charlie Baker issued an executive order23 directing the review of any acts, rules, regulations or policies (proposed by independent licensing boards) with the potential to limit competition in a relevant market for professional services. The review evaluates whether the proposed act, rules, regulations or policies advance the goal of ensuring the health, safety and welfare of the public sufficiently, so that it should be permitted regardless of any potential anticompetitive impact. Several types of acts warrant particular attention, including scope-of-practice rules, and territorial restrictions.
Activity has also been recorded in Iowa, Maine and West Virginia, in addition to other jurisdictions.
The Supreme Court decision has also raised concerns that individual board members may be liable for damages for antitrust liability related to their service. Indeed, some organizations have called for legislation that “indemnifies state boards and members from any damages or litigation fees related to claims against them to which the immunity applies.”24
Some states, such as Massachusetts and Rhode Island, clearly provide immunity and indemnification to at least some of their boards via statutory language. Other states, such as Illinois, Michigan, New Jersey, New York, Oklahoma and Texas, have indemnification statutes that may protect state agencies, but legislation here offers less clarity about whether indemnification extends to professional board members.
Private litigation has followed the Supreme Court ruling, most notably in the cases of Teladoc Inc. v. Texas Medical Board25, and Henry v. North Carolina Acupuncture Licensing Board.26In the former case, Teladoc, a provider of telehealth services, filed suit after the Texas Medical Board enacted a 2015 rule requiring face-to-face contact between an individual and a doctor before a prescription is issued. Teladoc claimed that rules placing limits on video consultations violate the Sherman Act. A district court ruling denied the medical board’s motion to dismiss the complaint, finding that the board was not actively supervised by the state.
The latter case saw several licensed physical therapists and patients sue the North Carolina Acupuncture Licensing Board for sending cease-and-desist letters to physical therapists who offered “dry needling” services. The physical therapists in receipt of the letter were accused of engaging in the illegal practice of acupuncture. The plaintiffs maintain that the board’s efforts violate federal antitrust law and a bid to dismiss the lawsuit against the board has been unsuccessful to date.
Conclusion The recent award of a substantial U.S. Department of Labor grant27 to “Identify licensing criteria to ensure that existing and new licensing requirements are not overly broad or burdensome and don’t create unnecessary barriers to labor market entry; and improve portability for selected occupational licenses across state lines,” should ensure that interesting developments follow in this fascinating, and often under-reported field.
WHEREAS, military service members and their families make sacrifices for the sake of our country and in defense of our freedom; and
WHEREAS, military families often move across state lines during their service and immediately following; and
WHEREAS, military spouses move households to accommodate their families at a rate ten times higher than non-military spouses; and
WHEREAS, thirty-five percent of military spouses work in an occupation that requires a professional license; and
WHEREAS, the top three occupations held by military spouses – teaching, child care services, and nursing – require occupational licensing; and
WHEREAS, current state laws vary dramatically regarding licensing requirements for many occupations; and
WHEREAS, sixty-eight percent of married service members reported their spouse’s ability to maintain a career impacted their decision to remain in the military by a large or moderate extent; and
WHEREAS, streamlining the occupational licensing process supports military families and promotes employment.
NOW, THEREFORE BE IT RESOLVED, that The Council of State Governments requests that the Congress and the Executive Branch work with state and local governments to promote policies which ease the transition for military service members and their families when they move across state lines by streamlining occupational licensing, which will ease the financial and administrative burdens placed on those families by the need to frequently regain their professional credentials.
Adopted by The Council of State Governments’ Executive Committee this 11th Day of December, 2016 in Colonial Williamsburg, Virginia.
In an effort to contain costs while also providing better consumer service, government agencies throughout North America are developing business plans and restructuring professional and occupational regulatory agencies. Increased technology use is bringing new security problems along with enhanced access for all stakeholders. The professional licensing stakeholder community is expanding to include international regulators.
About the Author Pam Brinegar is the executive director of The Council on Licensure, Enforcement and Regulation (CLEAR), which provides educational programs for professional licensing officials. CLEAR is an affiliate of The Council of State Governments.