Occupational Licensing and High Unemployment

U.S. News and World Report reports:

The latest reading of the labor market in the United States from the Bureau of Labor Statistics brings to mind a veteran prize fighter trying to pull himself up from the mat after a dizzying flurry of blows. An easy way to help the U.S. labor market regain its championship form would be a broad reconsideration of occupational licensing. We, along with countless others, applaud the president for including $15 million in his recent budget to study the rationale for occupational licensing in the United States.

The scope of workers directly affected by U.S. occupational licensing laws has steadily increased over the last several decades. Today, nearly 30 percent of the workforce is required to obtain a license to work at their current place of employment. Occupational licensing laws make it illegal to work in a profession without first meeting specific requirements (such as a specific degree or passing a test).


Many studies have estimated effects of occupational licensing on earnings, with some research focusing on the effects of occupational licensing for occupations not requiring extensive education requirements (e.g., barbers, massage therapists, and radiologic technologists). Limiting entry into these occupations via occupational licensing laws is most likely to negatively affect those in the bottom half of the earnings distribution in the United States.

Barriers to entry lead to higher unemployment.