Sigo: Moving for opportunity is getting easier for millions of workers – Daily Independent

Liam Seago

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By Liam Seago | Research Analyst, Knee Adjustment Research Center

While inflation continues to decline, many Americans are still experiencing a once-in-a-generation shock, and polls show that the cost of living remains a concern for voters.

Many families may benefit from moving to another state with more affordable housing or better job prospects. Indeed, the willingness to pick up stakes and move in search of better economic opportunities is quintessentially American. But only some really do.

A little-noticed fact is that internal migration in the US has declined sharply over the past 50 years. In the 1970s, about 17% of US families moved in a given year; today it is below 10 percent. Are Americans less adventurous, more attached to familiar surroundings, or more constrained by family ties?

perhaps However, institutional forces played an important role in discouraging interstate migration.

One factor stands out: a sharp increase in government regulations preventing workers from moving easily across state lines. In the mid-20th century, only 5 percent of workers needed a professional license—and those regulations were concentrated in a few industries, such as health care and law.

Today, about one in five American workers is directly affected by professional regulation. More than 340 professions are licensed in at least one state, ranging from fight promoters and auctioneers to ranchers and funeral directors.

The need to protect public health and safety is usually offered as a justification for these policies. However, there is little evidence that licensing consistently improves service quality. In part, this is because licensing protects existing workers from competition, weakening their incentives to supply for consumers.

To make matters worse, professional licenses are rarely portable. Because individual states control their licensing rules, workers who want to relocate often face inconsistent requirements, expensive fees and administrative hurdles. In New York, for example, barbers must receive 291 hours of training to become licensed. In neighboring Connecticut, a barber must complete 1,000 hours of training. Not surprisingly, these disparities deter many licensed workers from migrating—harming not only workers and their families, but also consumers who face shortages of critical services.

Fortunately, politicians have begun to address this problem. Some states have adopted universal recognition policies that remove some of the barriers to obtaining a license in another state. These laws require licensing boards to recognize out-of-state licenses as long as the worker is in good standing in their home state and meets certain requirements. A few states also recognize work experience in cases where the applicant comes from a jurisdiction that does not regulate a licensed profession in the state.

New Jersey was the first state to gain universal recognition in 2013, followed by New Mexico, Nevada, Missouri and Arizona soon after. Today, 26 states have adopted some version of universal recognition, and efforts are underway in many state capitals to expand and improve these reforms.

Universal recognition is broader in scope than other approaches, such as interstate agreements, which are profession-specific, require coordination among different state legislatures, and can take years to implement.

Most importantly, universal recognition works: States that have adopted the policy issue more licenses to newcomers and have seen higher levels of migration, more tax revenue, and increased labor market activity among workers in licensed occupations.

The need to reduce occupational licensing burdens has been recognized by leaders across the political spectrum, including the Obama, Trump and Biden administrations. As we approach another tough election, we should all want to promote opportunity for American workers. Universal recognition is a great way to start.

Liam Sygod is a research analyst at Knee Adjustment Research Center at West Virginia University’s John Chambers College of Business and Economics. Reader reactions, pro or con, are welcome [email protected].