On July 9, 2021, U.S. President Joe Biden signed a sweeping executive order aimed at increasing competition and reducing barriers in the American economy. The order, titled “Promoting Competition in the American Economy” (EO 14036), was criticized by some conservatives who balked at the expanded government intervention and vigorous antitrust enforcement it called for, while progressives generally praised it for taking aim at Big Tech, Big Pharma, and other industry giants that are exerting huge control over key sectors of the economy.
However, while commentators disagreed on much, there is at least one aspect of the order that was well received by those on both the left and right sides of the ideological spectrum – Biden’s call to address occupational licensing restrictions. Indeed, while it seems like Democrats and Republicans can’t agree on anything in recent years, occupational licensing reform provides a notable exception, constituting a rare bipartisan issue in a sharply divided political era.
With respect to occupational licensing, Biden’s executive order states that: “While many occupational licenses are critical to increasing wages for workers and especially workers of color, some overly restrictive occupational licensing requirements can impede workers’ ability to find jobs and to move between States.”
To address the issue, the order calls on the Federal Trade Commission (FTC) to exercise its statutory rulemaking authority under the Federal Trade Commission Act to loosen “unfair occupational licensing restrictions.” It also urges the heads of all agencies to “consider” using their authorities to address licensing regulations under their jurisdictions.
In remarks made at the White House, Biden further explained that onerous licensing requirements are extremely costly to workers in both money and time, giving the example of a hair braider who may have to complete a six-month apprenticeship before being able to practice in a new state, even though they have several years of experience. He also noted that licensing requirements have a particularly negative impact on military families who are required to move often, and that removing unnecessary restrictions would provide “more mobility, more opportunity, higher wages for families on the move.”
Obama issues call for occupational licensing reform with 2015 report
However, encouraging occupational licensing reform is not a position unique to the Biden administration. Both of Biden’s two most recent predecessors – a Republican and a Democrat – took similar stances during their time in the White House.
In July 2015, President Barack Obama’s Council of Economic Advisers published a report issuing a call to action for state governments to enact occupational licensing reform. The report examined the growth of licensing over the previous decades, its costs and benefits, and its impact on workers. While recognizing that licensing serves an important purpose in protecting consumer health and safety, the report stated that “current systems of licensure can also place burdens on workers, employers, and consumers, and too often are inconsistent, inefficient, and arbitrary.” Authors cited increased barriers to worker mobility and increased costs for consumers as two primary negative impacts of onerous licensing requirements, and noted that specific populations (those with criminal records, military spouses, teleworkers, entrepreneurs, and low-wage workers) were especially burdened.
The report made several recommendations for best practices that would help policymakers at the state level reduce these negative impacts, including: considering alternative forms of occupational regulation such as certification, registration, and mandatory bonding; carefully reviewing the costs and benefits of existing licensed professions using tactics such as sunrise and sunset reviews; easing exclusions on workers with criminal records; increasing public membership on licensing boards; and working to reduce licensing’s barriers to mobility through tools such as interstate compacts.
In April 2016, President Obama signed Executive Order 13725 aimed at encouraging competition in the American economy. Although similar to Biden’s, it did not mention occupational licensing specifically. However, a separate executive order called on agencies to reduce barriers for formerly incarcerated individuals seeking employment in licensed occupations.
Trump continues call for occupational licensing reform
As part of its broader focus on deregulation – and a notable departure from its otherwise steadfast commitment to dismantling Obama-era policies – the Trump administration continued the effort to encourage occupational licensing reform. In February 2017, President Trump set expectations for regulatory reform at the federal level with Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” which directed agencies to establish Regulatory Reform Task Forces that would evaluate existing regulations and repeal, replace, or modify those that eliminated jobs, inhibited job creation, or were deemed unnecessary.
In March 2017, the FTC created a new Economic Liberty Task Force to address regulatory hurdles to job growth, with a particular focus on occupational licensing. Under the direction of Acting FTC Chair Maureen K. Ohlhausen, who considered occupational licensing to be an issue of concern, the task force committed to working with state policymakers to enact occupational licensing reform. In September 2018, it released a report examining options to enhance occupational license portability, which encouraged the use of interstate compacts and model laws and advocated for reducing barriers and expediting licensure processes for people who relocate to a new state, especially military spouses.
In December 2020, during the last full month of his administration, President Trump signed his “Executive Order on Increasing Economic and Geographic Mobility” (EO 13966), which aimed to reduce the burden of occupational regulations on Americans “in order to promote the free practice of commerce, lower consumer costs, and increase economic and geographic mobility, including for military spouses.” Citing the success of recent reforms in Arizona, Florida, Iowa, Missouri, and South Dakota, the order encouraged occupational licensing reform throughout the U.S. and provided six principles to guide states.
On January 20, 2021, the day Joe Biden was sworn in as the 46th president of the United States, he revoked several executive orders issued by his predecessor, including EO 13777, which dealt with regulatory reform more broadly. He has not, however, revoked EO 13966, which targeted occupational licensing reform specifically. This came as no surprise, as Biden listed putting an end to “unnecessary occupational licensing requirements” among his 2020 presidential campaign promises. With the inclusion of occupational licensing in his executive order on competition, Biden signaled his intention to make good on that promise.
What impact will Biden’s executive order have on occupational licensing reform?
But the direct impact that Biden’s executive order will have on occupational licensing is unclear, as the president’s power in this area is limited. Executive orders are meant to engage federal agencies, and because occupational licensing is generally determined at the state level, the president doesn’t have the authority to force reforms in this area. Similarly, while he can call on the FTC to exercise its rulemaking authority, he can’t order it to do so, as the agency is independent and sets its own agenda. Going forward, Biden could encourage states to pursue occupational licensing reform by offering federal funding incentives through the Department of Labor (DOL), which was done by the Obama administration in 2016 and Trump administration in 2018.
In the seven months that have passed since Biden signed the executive order on competition, the White House Competition Council, which was established in the order to implement the actions identified, hasn’t listed any actions taken regarding occupational licensing. Although it noted a recent workshop held by the Department of Justice (DOJ) and FTC to discuss efforts to promote competitive labor markets and worker mobility, occupational licensing wasn’t on the agenda.
As for the FTC, which is now under the leadership of new FTC Chair Lina Khan, it remains to be seen whether the agency will take action to address occupational licensing specifically. Unlike Ohlhausen, Khan has not taken aim at occupational licensing as an issue of particular concern. In a September 2021 memo to FTC staff and commissioners outlining the agency’s strategic approach and policy priorities going forward, she made no mention of occupational licensing. However, in the Annual Regulatory Plan for 2022, the agency indicated that it will consider pursuing the actions called for in Biden’s executive order, including on occupational licensing, stating that it “will explore the benefits and costs of these and other competition rulemaking ideas.” Besides exercising its rulemaking authority, the FTC could influence occupational licensing reform through advocacy, public education efforts, and litigation – a tool that was strengthened by the 2015 U.S. Supreme Court decision in the case of North Carolina State Board of Dental Examiners v. Federal Trade Commission.
State-level occupational licensing reform likely to continue regardless of federal actions
But regardless of what, if anything, the White House and FTC do next, occupational licensing reform at the state level appears likely to continue. Like recent presidents, lawmakers and governors across the country from both parties have embraced occupational licensing reform as a bipartisan issue that makes sense both politically and economically. As a result, occupational licensing reform has taken off in recent years – a trend that started before the 2015 Obama administration report in some states (such as Michigan). Beyond reforms at the individual state level, states have been collaborating on occupational licensing reforms through initiatives such as the Occupational Licensing Policy Learning Consortium and interstate compacts.
Given the bipartisan appeal of this issue, occupational licensing reform could accelerate in the context of the ongoing COVID-19 pandemic economic recovery, as both Democrat and Republican-controlled legislatures and state governors seek ways to address labor shortages and reduce barriers to employment in their states and turn to occupational licensing reform as one way to achieve these ends.
