Freedom in the 50 States

Occupational licensing reform has become a major area of focus, both among right-of-center think tanks and former President Obama’s Council of Economic Advisers. We found that, while a relevant area of concern, the importance of state-level licensing variation in relation to measurable, direct costs to victims is somewhat less than that of the other regulatory policies discussed earlier.

The prevalence of occupational licensing is difficult to measure. Some of the literature uses listings of licensed occupations by state at America’s Career InfoNet, but we have found those listings to be highly unreliable, often excluding certain licensed occupations or including others that are privately certified, not regulated by the government.¹ The Archbridge Institute has produced a comprehensive measure of regulatory barriers to practice, which we now include for the first time. However, it is not available over time, and we therefore supplement it with other measures.²

Our first measure of licensure prevalence is a weighted sum for 64 occupations, where each occupation’s weight is its proportion of the total employment in those 64 occupations. A second measure is available only for 2014, 2016, 2017, and 2019, and it is carried back and interpolated to other years. It counts the number of mentions of certain phrases in each state’s statutes, such as “shall not practice.” We do find that these two variables correlate modestly (r = 0.30). The third measure is the Archbridge Institute’s new count of the number of occupational barriers at the state level as of 2022. The last measure is the most comprehensive—in fact, it is intended to exhaust the universe of required licenses in the U.S. states—but it is available for only one year, so we carried it back to 2000.

For the occupations where our collected data overlap with Archbridge’s, we did find some coding differences, which we attributed to methodological differences. We frequently use a “0.5” code for an occupation that is licensed locally, when such data are available, whereas economics professors Noah Trudeau and Edward Timmons look strictly at state-level licenses. We also use a “0.5” code for occupations where managers or business owners such as independent contractors face an onerous business-licensing procedure, whereas Trudeau and Timmons focus strictly on occupational, not business licenses.

In a handful of cases, we code as licensed an occupation that faces particularly extreme “title protection,” where practitioners are banned from accurately describing their trade at all and marketing themselves without certification. Trudeau and Timmons consider these occupations to be certified rather than licensed.

Finally, we have linked occupational licenses to the Occupational Employment Statistics (OES) occupational classifications so that we can weight by employment, but that means we lose some occupations that are more narrowly defined than anything the OES scheme captures.

To capture the burdens of licensure, we include summed examination, education, and fee requirements for licenses from the Institute for Justice’s second and third License to Work publications, which use a consistent methodology.³

We also include sunrise and sunset provisions for occupational licensing, but because of a lack of evidence regarding their effectiveness, they are worth less than 0.1 percent of the index. “Sunrise” refers to independent review requirements before a new licensing board is created; “sunset” refers to automatic expiration of licensing boards after several years so that the legislature must reauthorize them. Sunrise is apparently more effective than sunset and is worth more.

A new variable in this edition of the index is state adoption of an integrated or unified bar, which refers to mandatory state bar association membership for attorneys. Mandatory bar associations are more expensive and lobby state governments on political issues, making for a constitutionally relevant compelled speech problem.⁴

The remaining occupational freedom variables have to do with medical scope of practice. Nurse practitioner scope of practice is the most important. Dental hygienist independent practice is worth 0.1 percent of the index, followed by two more minor variables: membership in the Nurse Licensure Compact and physician assistant prescription authority.

Kansas leapfrogs other states into first place on occupational freedom this time after enacting broad nurse practitioner scope of practice in 2022 while keeping other occupational barriers lower than average.⁵ Across all our different measures of licensing extent and burden, Kansas consistently comes out significantly better than average. Vermont is the biggest gainer since 2007, driven by expanding health care paraprofessional scope of practice and a steadfast refusal to expand licensing prevalence, perhaps helped in part by the state’s sunrise process. Texas’s last-place finish on occupational freedom stands in stark contrast to its first-place finish on labor-market freedom.