The following editorial appears on Bloomberg View:
The freedom to move in pursuit of opportunity is a basic — and constitutionally protected — American value. Yet it’s a value in decline. American workers are half as likely to relocate to another state as previous generations. Lower mobility may be one reason why job openings in the U.S. are at an all-time high. The country’s irrationally restrictive system of occupational licensing bears much of the blame.
The proportion of U.S. workers with a state-issued license to practice their profession has quintupled since 1950, to more than 25 percent of the workforce. Licenses are required by at least one state for about 1,100 different occupations, though only 60 are regulated by all 50 states. The jobs range from nurses and lawyers to hairdressers, funeral attendants, travel agents and taxidermists.
Officially, the idea is to protect consumers and boost public safety. (Beware of rampaging stuffed wildlife!) Unofficially, trade associations use licenses to drive up wages and suppress competition. Improbable as it might seem, there’s a smidgen of evidence that licensing actually widens access to some jobs — by reducing the need for workers to rely on personal connections and introductions.
One thing, though, is undeniable: Licensing impedes mobility. Morris Kleiner of the University of Minnesota says licensing rules have cut state-to-state migration rates by as much as 40 percent for people in heavily regulated occupations like teaching. For the five industries studied, the regulations cost $500 million in lost economic output over 10 years.
In many cases, licensing has been pushed way past what’s reasonable, and should be rolled back. But if states are unwilling to do that, they could at least make licenses more portable.
Interstate compacts — which currently apply only to physicians, nurses, emergency medical technicians and physical therapists — establish binding, uniform standards that all participating states agree to accept. (This is how it works with drivers’ licenses.) Unfortunately, they often take years to hammer out. Alternatively, states could establish reciprocity agreements with like-minded neighbors. That would allow people to cross state lines for work and enable employers to tap a wider pool of applicants.
Neither approach requires federal action, though Washington can help by facilitating collaboration among state policy makers and industry representatives. In one such project, the Department of Labor is supporting a 10-state research consortium looking into ways of making licenses more portable and the rules less burdensome.
That’s good, but the onus is on states to address this issue with the urgency it demands. In an age of economic disruption, too many Americans are stuck in place. Making job licenses portable would go a long way toward getting workers moving again.