A year after Biden’s executive order on competition, action on occupational licensing falls short
executive order on competition update
It's been over a year since President Biden signed his executive order on competition, which specifically called for the loosening of “unfair occupational licensing restrictions.” We checked in on recent developments and looked at what might lie ahead.

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July 9, 2022 marked the one-year anniversary of President Biden’s signing of his executive order on competition, “Promoting Competition in the American Economy.” The sweeping order touched on various facets of the American economy, including technology, agriculture, pharmaceuticals, and labor, and instructed the Federal Trade Commission (FTC) and Department of Justice (DOJ) to pursue vigorous enforcement of antitrust laws with the overall aims of promoting wider competition and protecting workers, consumers, and small businesses from unfair practices.

As we wrote earlier this year, Biden’s executive order on competition specifically called for the loosening of “unfair occupational licensing restrictions” – resurrecting his earlier campaign promise to tackle this issue, as both the Obama and Trump administrations had done. In addition, Biden also described the negative impacts of onerous licensing requirements on American workers in remarks made at the White House after his signing of the order.

As we discussed previously, the power of the federal government to directly impact occupational licensing is limited because licensing is primarily determined at the state level. However, there are several actions that it can take to influence occupational licensing reform, including advocacy and education efforts and providing funding to support states’ reform initiatives.

But despite promising to tackle occupational licensing, to date the current administration has failed to take meaningful action to support reform efforts and continue the progress made in this area by Biden’s two most recent predecessors. Now that a year has passed, we checked in on recent developments pertaining to occupational licensing and looked at what might lie ahead.

Treasury Department report touts success of previous actions on occupational licensing, says federal government “will do more”

At the president’s request in his executive order on competition, the Department of the Treasury released a report in March 2022 that summarized the prevalence and impact of uncompetitive firm behavior, with a focus on the ways that insufficient labor market competition hurts workers and can hold back the broader American macroeconomy. The report briefly explores the costs and benefits of occupational licensing, with authors noting that “the economic benefit to licensed workers is at least theoretically ambiguous, especially if workers must pay to become licensed.” They also recognize that barriers to licensing, such as direct costs of licensing as well as the costs and time involved in meeting training requirements, “may be infeasible for individuals with less financial resources, which disproportionately includes people of color.”

The report also touted the success of grant funding from the Labor Department to support occupational licensing reform at the state level during the previous administration, saying that it produced tangible results such as a searchable database of licensing requirements for 48 occupations and “laid a foundation from which to launch future reform efforts.” The authors noted that several of these grants have since expired or will expire soon, but said that the federal government, in support of the executive order on competition, “will do more to support state efforts at reforms.”

However, since the report’s publication, the Biden administration and federal agencies have made no progress in addressing the issue of occupational licensing. While there were several grants issued to support occupational licensing review and reform at the state level under the Trump administration, the Labor Department hasn’t taken any similar actions since Biden has taken office. Further, despite being urged to do so in the executive order, the FTC has not yet taken any concrete rulemaking action regarding occupational licensing. And although federal agencies have been collaborating over the past few months to support the objectives of Biden’s executive order aimed at promoting competition in the labor market, they have so far ignored the issue of occupational licensing.

In March, the Justice Department’s Antitrust Division and the Labor Department signed a memorandum of understanding (MOU) to address some of the challenges highlighted in the Treasury Department report and support the objectives of the executive order on competition related to “unscrupulous practices” such as wage fixing and non-compete clauses. In July, shortly after the one-year anniversary of the executive order, both the DOJ’s Antitrust Division and the FTC announced partnerships with the National Labor Relations Board to protect workers from anticompetitive, unfair, and deceptive practices by employers. But while these collaborative efforts do support many of the objectives stated in the executive order on competition by facilitating greater coordination in information sharing and enforcement of labor and antitrust laws, they do not address occupational licensing.

Economists call lack of action on occupational licensing ‘disappointing’

The failure of the Biden administration to take any concrete actions to support occupational licensing reform since the signing of his executive order on competition has left many disappointed. In an op-ed published in The Hill, economists Conor Norris and Edward Timmons from the Knee Center for the Study of Occupational Regulation at West Virginia University called the Treasury Department report a step backward for taking “a much less nuanced view of occupational licensing” than both the Obama and Trump administrations, saying that it ignored key evidence economists have found about the effects of occupational licensing laws. With labor shortages continuing to plague key sectors of the economy, they expressed disappointment that the Biden administration is taking “a much weaker stance” on licensing reform than his two most recent predecessors – and the timing “couldn’t be worse.”

As the Biden administration continues to battle myriad economic challenges of epic proportions – from combatting soaring inflation to avoiding a recession – it’s uncertain whether we’ll see any concrete action on occupational licensing anytime soon, but we’ll continue to monitor the situation for any updates.

Stay informed.

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Ariel Visconti
Written byAriel Visconti
Ariel Visconti researches and writes on government and politics, regulation, occupational licensing, and emerging technologies.

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