Category Archives: Occupational Licensing

Labor Supply Effects of Occupational Regulation: Evidence from the Nurse Licensure Compact

Source: Christina DePasquale, Kevin Stange, National Bureau of Economic Research (NBER), NBER Working Paper No. w22344, June 2016
(subscription required)

From the abstract:
There is concern that licensure requirements impede mobility of licensed professionals to areas of high demand. Nursing has not been immune to this criticism, especially in the context of perceived nurse shortages and large expected future demand. The Nurse Licensure Compact (NLC) was introduced to solve this problem by permitting registered nurses to practice across state lines without obtaining additional licensure. We exploit the staggered adoption of the NLC to examine whether a reduction in licensure-induced barriers alters the nurse labor market. Using data on over 1.8 million nurses and other health care workers we find no evidence that the labor supply or mobility of nurses increases following the adoption of the NLC, even among the residents of counties bordering other NLC states who are potentially most affected by the NLC. This suggests that nationalizing occupational licensing will not substantially reduce labor market frictions.

Unlicensed & Untapped: Removing Barriers to State Occupational Licenses for People with Records

Source: Michelle Natividad Rodriguez, Beth Avery, National Employment Law Project (NELP), April 2016

From the summary:
Nearly one in three U.S. adults has a record in the criminal justice system. It’s hardly uncommon, but the resulting stigma and its lifelong consequences prove devastating for many. ….

….Passing a criminal background check is a common requirement to obtain a state license. In fact, the American Bar Association’s inventory of penalties against those with a record has documented 27,254 state occupational licensing restrictions. Thousands of these restrictions vary widely among states and professions. And because the criminal justice system disproportionately impacts people of color, these extrajudicial penalties—known as “collateral consequences”— perpetuate racial disparities in employment.

Although no national data exists as to the number of people denied licenses because of these collateral consequences, analogous data is available in the hiring context. For example, after submitting a job application, people with records on average are only half as likely to get a callback as those without a record. And for black men with records, the impact is more severe—only one in three receive a callback. Thus, having a conviction record, particularly for people of color, is a major barrier to participation in the labor market…..

Jobs after Jail: Ending the prison to poverty pipeline

Source: Allyson Fredericksen & Desiree Omli, Alliance for a Just Society, Job Gap Economic Prosperity series, February 2016

From the summary:
A prison sentence often doesn’t end on the day of release. For many people with conviction records, their sentence will continue for years to come with barriers to employment and housing.

Research in the report, “Jobs after Jail: Ending the prison to poverty pipeline,” by the Alliance for a Just Society, show that states have an average of 123 mandatory bans and restrictions preventing people with felony convictions from employment in certain occupations or from obtaining certain occupational or business licenses….

…..Beyond recidivism, though, finding work helps keep those with conviction records out of poverty. The Center for American Progress notes that a 2013 study found that that nation’s poverty rate would have been down 20 percent between 1980 and 2004 “if not for mass incarceration and the subsequent criminal records that haunt people for years after they have paid their debt to society.”

Recommendations in “Jobs after Jail” show that there are a variety of tools that can be used to ensure that a conviction record does not lead to a lifetime of poverty, including “Banning the Box” on employment applications, re-evaluating laws restricting employment in specific occupations, and making those with conviction records eligible for safety net services.

Additionally, a Certificate of Rehabilitation can help potential employers, licensing agencies, or even landlords assess the suitability, safety, and welfare of an applicant or renter. These certificates “can offer a presumption of rehabilitation … or at minimum an individual’s commitment to rehabilitation,” helping eliminate personal discrimination and providing additional evidence of rehabilitation and desire to reintegrate into the community.

So far, six states: Arizona, California, Illinois, Nevada, New Jersey, and New York use some form of these certificates, and Washington State is one of the latest states to propose adoption of a similar system….

Guild-Ridden Labor Markets: The Curious Case of Occupational Licensing

Source: Morris Kleiner, W.E. Upjohn institute for Employment Research, November 2015

From the summary:
In his third Upjohn Press book on occupational licensing, Morris M. Kleiner examines why the institution of occupational licensing has had such a curious evolution and influence in the United States, the European Union, and China. He also discusses the many similarities it has to guilds.

Occupational Licensing: A Framework for Policymakers

Source: Department of Treasury, Council of Economic Advisers, and the Department of Labor, July 2015

From the summary:
“Occupational licensing” may sound like a dry subject, but its rise has been one of the more important economic trends of the past few decades. Today, one-quarter of U.S. workers must have a State license to do their jobs, a five-fold increase since the 1950s. Including Federal and local licenses, an even higher share of the workforce now has a license. Smart regulation of workers can benefit consumers through higher-quality services and improved health and safety standards. Yet too often, policymakers do not carefully weigh the costs and benefits when licensing a particular profession, resulting in a patchwork of different licensing decisions and requirements. Estimates suggest that while 1,100 professions are regulated in at least one State, fewer than 60 are regulated in all 50 States. A report from the Department of Treasury, Council of Economic Advisers, and the Department of Labor released today explores the rise in occupational licensing and its important consequences for our economy.

The de-licensing of occupations in the United States

Source: Robert J. Thornton, Edward J. Timmons, U.S. Bureau of Labor Statistics, Monthly Labor Review, May 2015

Occupational licensing directly affects nearly 30 percent of U.S. workers today and continues to grow in density and scope. In this article, we identify and analyze those rare instances when occupational licensing laws have been eliminated—what we refer to as “de-licensing.” We also discuss recent examples in which courts decided to limit the scope of occupational licensing laws, and we analyze recent efforts (almost uniformly unsuccessful) of a few states to de-license groups of occupations. The reason proposed for most of these efforts is that excessive levels of licensing have hindered job creation, especially for people with lower levels of education. We argue that the paucity of successful de-licensing efforts is due to intense lobbying by associations of licensed professionals as well as the high costs of sunset reviews by state agencies charged with the periodic review of licensing and its possible termination.

Analyzing the Labor Market Outcomes of Occupational Licensing

Source: Maury Gittleman, Mark A. Klee, Morris Kleiner, Federal Reserve Bank of Minneapolis, Staff Report 504, October 2014

From the abstract:
Recent assessments of occupational licensing have shown varying effects of the institution on labor market outcomes. This study revisits the relationship between occupational licensing and labor market outcomes by analyzing a new topical module to the Survey of Income and Program Participation (SIPP). Relative to previously available data, the topical module offers more detailed information on occupational licensing from government, with a larger sample size and access to a richer set of person-level characteristics. We exploit this larger and more detailed data set to examine the labor market outcomes of occupational licensing and how workers obtain these licenses from government. More specifically, we analyze whether there is evidence of a licensing wage premium, and how this premium varies with aspects of the regulatory regime such as the requirements to obtain a license or certification and the level of government oversight. After controlling for observable heterogeneity, including occupational status, we find that those with a license earn higher pay, are more likely to be employed, and have a higher probability of retirement and pension plan offers.

Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service

Source: Morris M. Kleiner, Allison Marier, Kyoung Won Park, Coady Wing, National Bureau of Economic Research (NBER), NBER Working Paper No. w19906, February 2014
(subscription required)

From the abstract:
Occupational licensing laws have been relaxed in a large number of U.S. states to give nurse practitioners the ability to perform more tasks without the supervision of medical doctors. We investigate how these regulations may affect wages, employment, costs, and quality of providing certain types of medical services. We find that when only physicians are allowed to prescribe controlled substances that this is associated with a reduction in nurse practitioner wages, and increases in physician wages suggesting some substitution among these occupations. Furthermore, our estimates show that prescription restrictions lead to a reduction in hours worked by nurse practitioners and are associated with increases in physician hours worked. Our analysis of insurance claims data shows that the more rigid regulations increase the price of a well-child medical exam by 3 to 16 %. However, our analysis finds no evidence that the changes in regulatory policy are reflected in outcomes such as infant mortality rates or malpractice premiums. Overall, our results suggest that these more restrictive state licensing practices are associated with changes in wages and employment patterns, and also increase the costs of routine medical care, but do not seem to influence health care quality.

Underpaid or Overpaid? Wage Analysis for Nurses Using Job and Worker Attributes

Source: Barry T. Hirsch and Edward J. Schumacher, Southern Economic Journal, Vol. 78, No. 4, April 2012
(subscription required)

From the abstract:
Nursing shortages are common despite the fact that nurses earn far higher wages than other college-educated women. Our analysis addresses the puzzle of “high” nursing wages. Employee data from the Current Population Survey are matched with detailed job descriptors from the Occupational Information Network. Nursing requires high levels of compensable skills and demanding working conditions. Standard log wage regression estimates indicate nursing wage advantages of about 40%. Accounting for job attributes reduces estimates to roughly 20%. Rather than transforming ordinary least squares log gaps to percentages, alternative methods measuring Mincerian gaps produce estimates of 15% or less. We conclude that nurses receive compensation that is much closer to opportunity costs than that seen in standard analyses, narrowing the shortage puzzle. Supply constraints in nurse licensing can produce wages above long-run opportunity costs but that are too low to clear short-run labor markets during periods of growing demand. The analysis provides broader implications for the conduct of wage analyses.

Questions and Answers: The ADA and the Rights of Persons with HIV/AIDS to Obtain Occupational Training and State Licensing

Source: U.S. Department of Justice, Civil Rights Division, Fact Sheet, July 2009

From press release:
The Justice Department today released a new technical assistance fact sheet on legal requirements relating to admitting individuals with HIV or AIDS to occupational training schools and granting state licensure in occupations such as barbering, massage therapy and home health care assistance.

Persons with HIV and AIDS unfortunately still face obstacles in obtaining training and state licensure in these occupations because of overly broad state licensure requirements that applicants be free of communicable diseases. Because HIV disease is not communicate through casual contact, excluding individuals with HIV under these licensure requirements is unnecessary and discriminates against these individuals in violation of the Americans with Disabilities Act. This publication is intended to provide guidance for state licensing agencies and occupational training schools so that individuals with HIV or AIDS have an equal opportunity to pursue these occupations.
See also:
The Potential Impact of the Americans with Disabilities Act on Individuals with Disease
Source: Imani Webb-Smith, Workplace Fairness Blog, July 20th, 2009