A new comprehensive report from the Institute for Justice, a nonprofit law firm, shows the substantial barriers that occupational licensing places on the economy. By evaluating the various state licensing requirements for 102 low- and moderate-income occupations, the report’s authors found that an average license required applicants to pass an exam, pay more than $260 in fees, and complete nearly a year of education and training.
Other researchers estimate that licensing costs the economy between $127 billion and $203 billion per year in higher consumer prices and elevated levels of unemployment. But, as the Institute for Justice shows, this large financial burden is disproportionately borne by low-income individuals—a conclusion also supported by recent research from the Archbridge Institute and the Foundation for Government Accountability.
Though $260 may not pose a substantial barrier to work for someone with a high income, this amount is the low-end of what a family of four spends on a week’s groceries, according to the U.S. Department of Agriculture. For those struggling to make ends meet, every dollar in increased costs to starting work is a barrier.