by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The Council of Economic Advisers (CEA) recently released its annual report in conjunction with President Trump’s Economic Report. In the joint document, the CEA discussed everything from wages and consumer spending to regulatory reform and economic growth. While spending a good deal of time boasting about the current state of the economy under the Trump administration, it also highlighted a very important and often significantly under-discussed challenge facing a growing number of Americans: overly burdensome occupational licensing. …
… This year, the report focused on a number of challenges facing both workers and the economy more broadly. Particular emphasis was placed on the need to drastically improve interstate worker mobility. As part of this initiative, the report discussed the problems created by excessive occupational licensing restrictions and called states to action, as this issue is almost exclusively within their domain.
The prevalence of occupational licensing has grown exponentially over the past century. In the 1950s, around 5 percent of the workforce needed to obtain a license before engaging in their particular line of work. That number is now approaching 30 percent. A large body of research has documented the exorbitant cost of these burdensome licensing requirements and the negative effects they have on workers and consumers alike. It is estimated that occupational licensing serves as a hidden tax on consumers of between 3 to 16 percent, costing them up to $203 billion dollars, and that these restrictions have resulted in up to 2.85 million fewer jobs nationwide. There is also evidence that these costs fall disproportionately on the poor and disadvantaged.