Occupational licenses are government-approved requirements that individuals must gain to work in a profession. Most license approvals are contingent upon completing an educational program, passing an exam, and paying a fee.
Licensing has not always played a significant role in the American labor market. In the 1950s, fewer than five percent of U.S. workers were required to have a state-issued license to work. By 2015, however, this number had risen to nearly 30 percent. There are now over one thousand occupations licensed at the state level alone, with still more licensed at the federal and municipal levels.
This number includes high-earning occupations traditionally under licensure, including lawyers, doctors, and accountants. However, it also includes low- to medium-income occupations that pose much less of a physical or financial risk to the public, including interior designers, animal massage therapists, and florists.
The astronomical growth in licensing has been spurred by several factors. Proponents have argued that licensing is essential to protecting public safety and quality of services for consumers, and that it primarily affects individuals with higher incomes who should have no problem paying the exorbitant fees. But unfortunately for taxpayers, consumers, job seekers, and entrepreneurs, these arguments are not based on reality.