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For many Americans, moving between states means leaving a job that they cannot take with them. Occupational licensing creates a barrier to work mobility between states, diminishing economic growth and individual achievement. Licensing requirements within a state are burdensome enough, but out-of-state licenses are often rejected altogether. Migrating workers are forced to go through the entire licensing process anew or meet additional requirements to transfer a license.
The State Solution
States should adopt universal recognition of occupational licenses. Universal recognition allows workers to enter a state and quickly engage in the occupation they have performed in another state, deepening a state’s talent pool and expanding economic growth.
Arizona first modeled this solution with its landmark reform in 2019, which recognizes out-of-state licenses and government certifications from other states for workers who have been licensed for at least year. The worker cannot have disqualifying criminal conduct or be subject to an investigation, and the license must be in good standing in all other states.
Why This Matters
Every American should have the opportunity to practice their profession in the state of their choice—without having to overcome repetitive, time-consuming, and expensive restrictions. As a result of the pandemic, the American economy faces record levels of unemployment and significant labor disruptions between states and across industries. Burdensome occupational licensing systems that restrict interstate mobility cannot be justified in the best of economic times. During economic contractions like the pandemic recession, they are outright unfair.
- Occupational licensing barriers reduce interstate mobility for nearly one in four American workers who are in licensed occupations.
- Evidence shows that workers in licensed occupations move across state lines at significantly lower rates than unlicensed workers, restricting the efficient functioning of labor markets.
- These restrictions reduce worker earnings because they cannot experience earnings growth from changing jobs between states.
- These restrictions also reduce job creation and economic growth in states that need more workers but cannot easily bring them in due to licensing barriers.
States Currently Implementing Universal Recognition
What States Should Do Next
States should enact a Universal Recognition Act based on the Arizona law. Model legislation is available from the Institute for Justice and Goldwater Institute and from the other states that have already enacted a similar law.
- Working paper: Is Occupational Licensing a Barrier to Interstate Migration?
- Universal Licensing Recognition (Arizona Office of the Governor)
- Universal Recognition of Occupational Licenses Act model legislation (Institute for Justice)
- Breaking Down Barriers to Work – Universal Recognition of Occupational Licenses Act (Goldwater Institute)