Report: 28 States Now Recognize Occupational Licenses From Elsewhere

A report published early this month found that easing licensing requirements for physicians increases patient access to healthcare, especially among older people, and reduces cost barriers to treatment. Occupational licensing reform has been a simmering issue for years, and one that draws rare bipartisan support. This sort of research demonstrates just how important reform is even for professions that deal in matters of life and death. Keep that in mind as we look at Archbridge Institute’s 2025 State Occupational Licensing Index to see where things are getting better and where they’re not.

Licensing Barriers Aren’t a Red or Blue Issue

“In 2025, the state with the highest occupational licensing burden is Oregon (#1), followed by Tennessee (#2), Texas (#3), Kentucky (#4), and Florida (#5); the state with the lowest occupational licensing burden is Kansas (#51), preceded by Missouri (#50), Wyoming (#49), Indiana (#48), and New York (#47),” write Noah Trudeau, Edward Timmons, and Benjamin Seevers, authors of the “human flourishing” think tank’s latest annual Index. “The overall state rankings show that traditionally ‘blue’ and ‘red’ states alike struggle with occupational licensing requirements, and there is opportunity for bipartisan reform across the country’s various regions.”

There’s not just opportunity for bipartisan reform—there’s also appetite for it. The last three presidents have all favored easing occupational licensing requirements. In 2015, the Obama administration published a report revealing that “more than one-quarter of U.S. workers now require a license to do their jobs, with most of these workers licensed by the States” up from about 5 percent of jobs in the 1950s. This is a problem, the report added, because “there is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines.”

Maureen K. Ohlhausen, then the first Trump administration’s acting Federal Trade Commission chairman, followed up in 2017 by charging that “the public safety and health rationale for regulating many of those occupations ranges from dubious to ridiculous.…I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”

The Biden administration issued an executive order targeting (in part) “overly burdensome occupational licensing requirements that impede worker mobility and suppress wages also restrict competition.”

States Step Up With Reform, Including Universal License Recognition

But those were federal officials pointing out a serious problem at the state level that needs to be resolved, in our federalist system, by state lawmakers and governors. Many states have stepped up, often with my own Arizona in the vanguard (ranked ninth least-burdensome by Archbridge). Reforms include removing licensing requirements for some jobs, reducing the burden and cost of getting licensed, and universal license recognition under which licenses issued by other states are accepted. No state has yet eliminated licensing entirely, but a growing number are making it less onerous.

The best reform, by far, is eliminating licensing requirements for jobs and letting certifications, employment history, reviews, and word of mouth speak for the quality of people’s work. But that can be a tough sell for people sold the line that licensing somehow protects them, especially in potentially risky areas like healthcare. That leaves universal license recognition a popular step in recent years, given it’s difficult to argue that standards and legal liability for work vary much across the U.S.

“As of 2025, 28 states have adopted some form of universal licensing recognition,” write Trudeau, Timmons, and Seevers. “It is important to note that the potential effectiveness of the reform varies depending upon two key provisions. First, some states have ‘substantially equivalent’ or ‘substantially similar’ clauses, thus limiting the number of workers that can utilize the reform. Second, some states have residency requirements that also can limit the ability of workers to utilize the reform.”

Arizona, for example, has a residency requirement (you must live in-state to take advantage) but doesn’t require that licenses issued elsewhere be “substantially similar” to those issued locally. That’s enough to earn the state a silver medal in Archbridge’s rankings and a decent slot in the Index. Just how important implementing full reform can be is demonstrated in a recent staff report by Yun Taek Oh and Morris Kleiner, published by the Federal Reserve Bank of Minneapolis.

Recognizing Licenses Across State Lines Improves Healthcare Access

“The universal reciprocity of physician licenses significantly raises the proportion of respondents accessing healthcare, particularly among older respondents, and reduces the proportion of respondents not getting healthcare services because of cost considerations,” the authors write of their research findings. However, they add that the positive effect of universal license recognition “is not observed among the states that adopt universal reciprocity but impose residency requirements.”

They conclude that the greatest benefit from universal license recognition comes from encouraging physicians to practice across state lines rather than to relocate. Residency requirements to licensing stand as ongoing barriers to increased competition and access, and lower costs.

Not all barriers to entry in any given trade or profession involve overt licenses. Sometimes, working in one field is predicated in having unnecessary credentials from another. “As an example of a barrier versus a license, in the state of Alabama, all acupuncturists are required to be licensed physicians; thus while the occupational title of ‘acupuncturist’ is not licensed, that occupation is barred by a license in some way,” observe Trudeau, Timmons, and Seever. Other states require cosmetology licenses to braid or shampoo hair. So, people may be required to jump through hoops to get credentialed in a field in which they don’t plan to practice in order to work in a chosen trade. Obviously, that limits competition and raises costs.

In terms of spurring along reforms, once place to start might be the 2025 State Occupational Licensing Index’s roundup of “most uniquely licensed occupations” for each state, meaning the job for which each state requires a license that has the fewest barriers across all other states. For example, only one state each requires licenses to work as HIV–AIDS counselors, lightning-protection installers, and mold remediation workers. If 49 other states plus D.C. see no reason to license those jobs, the states requiring such credentials really have no excuse. Six more jobs are licensed in just two states; four in three.

Most people recognize that occupational licensing is out of control. Archbridge’s annual index shows that we’re making progress in easing barriers to work, but there’s still a long way to go.

The post Report: 28 States Now Recognize Occupational Licenses From Elsewhere appeared first on Reason.com.

Source: https://reason.com/2025/08/29/report-28-states-now-recognize-occupational-licenses-from-elsewhere/