States Explore Occupational Licensure Reform

The consortium of states participating in the U.S. Department of Labor’s Occupational Licensing: Assessing State Policy and Practice project recently began their second round of project meetings to discuss occupational license reform. The 11 states–Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maryland, Nevada, Utah and Wisconsin–are individually meeting to further review their licensure process, engage with policy experts and develop action plans. The state team meetings will culminate this year in the project’s second multistate learning consortium summit to be held Nov. 28-30 in Clearwater, Florida.

The Council of State Governments, along with its project partners the National Conference of State Legislators and the National Governors Association, continues to deliver technical assistance to the states during the project by facilitating meetings, issuing policy reports and collecting state licensing data. The partners recently published four reports that focus on the unique challenges and barriers specific to immigrants with work authorizationpeople with criminal recordslow-income, unemployed & dislocated workers; and veterans and military spouses.

The following is an update on the progress some of the states have made during the second round of meetings.

Kentucky

The Kentucky team’s meeting on Sept. 19 provided the group an opportunity to learn about the differences in state regulatory board structures as well as discuss opportunities for further research including sunrise/sunset review legislation.

“Occupational licensure is a topic that really encompasses a multitude of policy areas including workforce and economic development and veterans’ affairs,” said Brian Houillion, chief of staff and executive director of financial management and administration for the Kentucky Department for Local Government. “The goal is to take a look at what regulatory framework will best serve the needs of the state. For example, during the meeting we explored the different types of state regulatory board structures as part of our ongoing conversation on finding ways to improve our licensure board system.”

Kentucky was also recently awarded an additional $450,000 Department of Labor grant to further help improve the licensure process in the state.

“The grant allowed us to bring on a grant and project administrator to better facilitate the process of licensing reform,” said Houillion. “The additional staff will assist the state’s project team to complete the smaller steps that occur between meetings and stay on objective.”

Utah

During Utah’s Sept. 21 project meeting, the team learned from policy experts about competency-based testing, improving the processes of sunrise/sunset provisions, and licensure burdens specific to immigrants.

Utah state Sen. Todd Weiler, who is a member the state’s Occupational and Professional Licensure Review Committee, said the meeting was a continuation of the team “doing its due diligence by taking deep dives into policy areas and learning from the experts.” He added that one of the team’s primary purposes was to “do the laboring work before the Legislature considers additional reform.”

“Utah is in a transition state as it moves from an older model to a more up to date approach,” he added. “The project team is answering the questions about the health and safety objectives to be achieved through licensure and how to step away from the turf battle of professions and focus on how the customer is best served. The pendulum has swung to decrease regulation wherever it makes sense.”

Utah enacted a number of occupational licensure reform legislation last year that focused on improving licensure mobility, reducing regulation and assisting relocating military families. 

Maryland

Maryland’s Sept. 25 project team meeting centered on ways to expand licensure portability and improve stakeholder messaging. Victoria Wilkins, commissioner of the Division of Occupational and Professional Licensing at the Maryland Department of Labor, Licensing and Regulation commented on the importance of improving the state’s licensure process through the project.

“Anything that decreases regulations to get more people employed while still maintaining public health and safety is something we want to explore,” she said. “The project allows us to hold cross sectional learning meetings with a variety of stakeholders to improve the conversation about licensure.”

The state team is organized in a committee-based structure, which divides the group’s focus areas into the categories: identifying barriers, business needs, community relations, data and research, and addressing the “low hanging fruit” of licensure reform. Wilkins said the “low-hanging fruit” committee could, for example, address some licensure issues outside of the state’s legislative sessions.

“The Legislature only meets once a year, so the committee was established to identify what are some of the simpler changes that could be made in the meantime,” she said. “For instance, the passing score thresholds for plumber licensing exams were recently revised to bring them into uniformity with Maryland’s other licenses.”

The meeting’s guest speaker was Karen Goldman, attorney advisor for the Office of Policy Planning at the Federal Trade Commission, who presented her recently completed FTC policy report on licensure mobility. In the report, Goldman highlighted the important role that CSG’s National Center for Interstate Compacts serves when it comes to how states deal with structuring reciprocity. 

CSG National Conference

The Council of State Governments is providing additional opportunities for states to engage with policy experts and advance the conversation on occupational licensure reform during its annual National Conference, to be held in Greater Cincinnati-Northern Kentucky, Dec. 5-8. The conference will include multiple sessions to foster learning about licensure reciprocity through state compacts, lessons from military members and spouses state licensing policies, and specific case studies of how certain professions have handled reciprocity.

To find out more information about the conference, including how to register, please visit https://www.csg.org/2018nationalconference/Agenda18.aspx

New Occupational Licensing Analysis Opposes Traditional Theory

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.

Electricians

StatesExperienceNo. Of
Exams
Length of
Renewal
Continuing
Education
Initial
Cost
Renewal
Cost
Iowa16000, h13187575
Kentucky4, y11615050
Massachusetts8000, h1345330104

Massage Therapists

StatesTraining
Hours
No. Of
Exams
Length of
Renewal
Continuing
Education
Initial
Cost
Renewal
Cost
Illinois600124837087.5
Michigan5001354290115
Nebraska10001224322127

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.

Plotted BLS Data

Connecticut Collaborating on Best Practices for Occupational Licensing

By Ray Williams

Connecticut held a meeting on March 2, 2018 on occupational licensure with assistance from The Council of State Governments, or CSG, the National Conference of State Legislatures, or NCSL and the National Governor’s Association, or NGA.

CSG launched an occupation licensing technical assistance project in August 2017 in partnership NCSL and NGA, through a $7.5 million grant from the U.S. Department of Labor, or DOL. The 11 state consortium includes Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maryland, Nevada, Utah and Wisconsin. Each state focused on specific occupations and target populations in an attempt to identify known and unknown barriers of occupational licensing.

The DOL project scope identified the key populations for each state as military spouses and children, immigrants with work authorization, people with criminal records and unemployed and dislocated workers. The DOL identified 34 occupations for evaluation, allowing each state to select specific occupations based on their individual needs. The overall objective of the project is to examine occupational licensing requirements, identifying potential barriers and to improve portability across state lines.

The consortium met last November in Tucson Arizona, giving state leaders an opportunity to work on action planning with licensing stakeholders, while collaboratively collecting data. Since the November meeting, 7 states have held in state meetings including Arkansas, Colorado, Connecticut, Delaware, Illinois, Maryland and Nevada. The remaining 4 states, including Indiana, Kentucky, Utah and Wisconsin have in state meetings planned in the coming weeks.

Throughout these meetings, reciprocity is one of the emerging themes and states are looking to neighboring states, as well as consortium states, to ease occupational licensing portability between state lines.

Connecticut’s Department of Public Health Section Chief Christian Anderson said during the 2017 consortium meeting, “We have always assumed that Connecticut’s reciprocity agreements have been a selling point for the state but we really didn’t know until we met with consortium states.” 

During Connecticut’s in-state meeting, April 2018, Director of Policy Bill Wlez said, “it is imperative that Connecticut review and expand reciprocity agreenents with consortium states, as well as neighboring states, to stay competitive and continuing to protect public safety.”

Over the course of the project, consortium states are relying on current and active interstate compacts as a means to solve problems that span state boundaries. CSG’s National Center for Interstate Compacts, or NCIC, is a policy program developed by CSG to assist states in developing interstate compacts, which are contracts between states. Currently, the NCIC manages more than 200 active interstate compacts helping states facilitate consensus on national issues.

CSG, NCSL and NGA provided a throughout review of state requirements and reciprocity agreements on occupational licenses. The collected data will allow all states to ensure consistency throughout testing procedures, education requirements and any necessary training requirements across all 50 states and 5 territories.   

In addition to reciprocity agreements, consortium states are also using shared data to examine best practice methods for background check requirements, apprenticeship programs, transferability of military skills, overcoming legislative obstacles and lessons learned approaches to occupational licensing barriers.”It is an opportunity for all states to learn from one another, as well as hopefully ease barriers in portability, all while advancing economic development,” Connecticut’s DOL Executive Director Kathleen Marioni said during a status meeting.

For the remainder of 2018, CSG, NGA and NCSL will visit each consortium state, providing technical assistance and best practice methodologies from other states. All 11 consortium states will meet in November of 2018 to review and share their progress with stakeholders.

CSG Launches National Occupational Licensing Database

By Kathryn Price

CSG, in partnership with the National Conference of State Legislatures and the National Governor’s Association, released the National Occupational Licensing Database to help state leaders better understand the national licensing landscape. This database contains information on the criteria required to attain a license in 34 occupations with 18 requirements being assessed. Some of the data points include initial and continuing education requirements, training, experience, exams and fees. Additionally, if a certain occupation is selected, a map of the states that require licensure will be produced (See top image below for map produced when searching the database for information on electricians). The database also allows for the user to make comparisons between states and occupations (See bottom image below for an excerpt of search results from the database when selecting to show information on cosmetologists).

The database gives the user the ability to see all the requirements across 50 states and shows the disparities between each state. These differences can create barriers for those moving across state lines as well as those attempting to gain initial licensure.

The licensing process is designed to ensure the safety of workers and the public by requiring a certain level of competency to practice a profession. However, some licenses can have excessive requirements and fees, which may be insurmountable for some. For example, home inspectors in New Jersey face an initial licensure fee of $850 along with a $500 fee every two years to renew. Whereas, those in Pennsylvania pay $225 initially and the license doesn’t expire. Four groups who are particularly vulnerable when it comes to gaining licensure are immigrants with work authorization, those with criminal records, military families, and unemployed and dislocated workers.

This database is the first step in a project aimed at understanding and reducing these barriers to licensure as well as learn best practices for licensing certain occupations. The three-year project, entitled Occupational Licensing: Assessing State Policy and Practice, is a joint effort by The Council of State Governments, the National Conference of State Legislatures, and the National Governors Association Center for Best Practices, and is funded by a grant from the U.S. Department of Labor.

The project also selected a consortium of 11 states that will meet with licensure experts to discuss each state’s current licensure practices, and develop and implement action plans that aim to remove excessive barriers created by some licenses. The states in the consortium are Arkansas, Colorado, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maryland, Nevada, Utah, and Wisconsin.

The first consortium meeting was held in December of last year in Tucson, Arizona, with two more meetings slated for fall 2018 and summer 2019. In addition to these meetings, the project will produce continuing resources, namely a webinar series, blogs, newsletters and magazine article on occupational licensure policy.

The map produced when searching the database for information on electricians shows that 19 states do not require licensure.