How Licensing Reform Can Help States and Veterans
Gov. Scott Walker recently announced that Wisconsin will spend $1.9 million to attract returning military personnel and their spouses to the state as part of an effort to expand the labor pool. Veterans are in high demand in states facing labor shortages because the U.S. military trains its personnel with skills that are applicable to nearly 1,000 different civilian occupations. But existing occupational licensing requirements serve as a major deterrent to these recruitment efforts.
The expansion of licensing requirements in Wisconsin has been rapid — and troubling. From 1996 to 2016, the number of licensed professionals increased by 34 percent in the state, and the number of licensed professions increased by a whopping 84 percent. During that same period, the total state population grew at just over 10 percent. This trend is consistent with the growth of licensing regulations in other states.
Licensing requirements harm many low- and middle-income workers by raising the barrier to entry in hundreds of occupations. Burdensome educational requirements and high fees are often required to become licensed in certain occupations, and many individuals lack the time and money to clear these hurdles. While governments often justify stringent licensing laws as a way to protect the health and safety of consumers, there is little evidence to suggest that licensing actually improves health and quality outcomes.
Service members and their spouses are hit particularly hard by licensing regulations. Between 35 and 50 percent of military spouses work in fields that require licensure or certification. As these families migrate across state lines, they often encounter licensing requirements that differ from those of the state they left. The result is that over 70 percent of military spouses in licensed professions must have their licenses renewed or reissued upon moving. The process can be expensive and time-consuming, not to mention redundant.
Given these obstacles, people working in licensed professions are much less willing to cross state lines. Wisconsin and other states may find their efforts to recruit military servicemembers stymied absent occupational licensing reform. The good news is that Wisconsin has made at least some progress in this regard when it comes to military members. Earlier this year, the legislature passed fee waiver legislation that reduced licensing fees for military service members and their spouses. Wisconsin also allows veterans to request consideration of their military training, education, and experience to satisfy licensing requirements.
While these measures are a good start, more can and should be done to lower occupational licensing burdens for servicemembers. Vermont’s governor recently signed into law a “skills waiver” bill that identifies several occupations — including engineering, plumbing and nursing — in which military personnel already receive significant training during their active-duty careers. In these fields, state licensing boards will be required to issue civilian licenses to recent veterans who have already received relevant training. For instance, a veteran who served as an army medic for 20 years would be granted a nursing license without needing to undergo additional, duplicative training. Wisconsin should follow Vermont’s example in passing a skills waiver bill.
Another priority should be to expand licensing reciprocity with other states. By recognizing similar licensing credentials earned elsewhere in the country — say, for example, allowing a licensed nurse from California or a licensed cosmetologist from Michigan to practice in Wisconsin without needing to obtain a new license — lawmakers could make their state more attractive to veterans, their spouses, and any other workers that they’re trying to recruit.
The ultimate goal should be to reduce occupational licensing burdens across the board. In many cases, licensing has become a tool leveraged by existing practitioners to stifle competition and fence out newcomers. States like Michigan have shown the way by proactively eliminating several nonsensical licenses.
In a hot economy with low unemployment, it’s understandable that state lawmakers would seek solutions to the skilled-labor shortage. Spending $1.9 million to recruit military personnel, however, is unlikely to fix the problem. States needs to target and eliminate licensing burdens that prevent veterans — and thousands of other residents — from joining the workforce in the first place.
Michael Jahr is vice president of outreach and special projects at the Badger Institute. C. Jarrett Dieterle is the director of commercial freedom and a senior fellow at the R Street Institute.
