Occupational Licensing

Pennsylvania Opens Up to Workers From Other States

Gov. Tom Wolf just signed a bill to recognize occupational licenses obtained in different parts of the country.


Moving to Pennsylvania? It just got easier to find a new job there.

Gov. Tom Wolf on Tuesday signed a bill into law that requires Pennsylvania recognize occupational licenses issued in other states. Pennsylvania joins Arizona and Montana as the only states to recognize occupational licenses issued in other states. 

In a statement, Wolf said the new law would "improve the occupational licensing process while making the commonwealth a more attractive place for skilled workers and businesses." Wolf, a Democrat, has made occupational licensing reform a focus of his administration since winning re-election in 2018, and this latest effort cleared both chambers of the Republican-controlled General Assembly with broad bipartisan support. 

The new law instructs the state's Bureau of Professional and Occupational Affairs to issue licenses to license-holders from other states as long as the requirements are roughly the same as Pennsylvania's. If the worker's qualifications don't appropriately match Pennsylvania's requirements, the law permits the granting of a temporary license while workers catch up on Pennsylvania-specific requirements. 

Either way, that means workers moving to the state will be able to get a job in a licensed profession and begin working right away, rather than having to spend months or even years re-taking licensing classes and exams. 

That's a big deal, especially considering that Pennsylvania has 255 different occupational licenses. One out of every five Pennsylvania workers needs an occupational license to do their job legally, according to the governor's office. 

Those licensing laws impose high costs on the people of Pennsylvania. There isn't much evidence that requirements like making barbers go through over a thousand hours of training improve public health or the quality of service provided. Instead, these regulations create unnecessary barriers to entry for the profession. This raises prices and reduces economic opportunity, particularly for younger, lower-income, and minority workers. 

According to a 2018 Institute for Justice study, licensing laws cost the state of Pennsylvania $9.4 billion in economic output per year, along with over 88,000 jobs. The state has also been losing population to other states for decades, with a net population loss of 25,000 people in 2018 alone. 

Allowing workers to take licenses from one state to another doesn't reduce all the problems associated with licensing, but it does help increase mobility in the workforce. The rise in occupational licensing has been linked to an overall decline in worker mobility across state lines, for example, suggesting that licenses prevent workers from taking advantage of opportunities elsewhere.

According to research from economists Morris Kleiner and Janna Johnson at the Federal Reserve Bank of Minneapolis, occupational licensing reduces interstate migration by 36 percent within licensed professions. That lack of mobility costs licensed workers between $178 million and $711 million every year, the economists estimate. Not moving to higher-productivity jobs means lower wages, according to the Brookings Institution.

While Pennsylvania's new licensing portability law naturally draws comparisons to the measure passed earlier this year in Arizona, it's actually a slightly watered down version of the concept. Arizona's licensing reciprocity law does not give licensing boards discretion to decide which out-of-state licenses to accept. However, the new Pennsylvania law only recognizes out-of-state licenses if the training requirements they require are "substantially similar" to between training requirements for Pennsylvania licenses and out-of-state ones. This provision allows licensing boards more leeway to not recognize out-of-state licenses if it deems them too lax. 

The new law in Pennsylvania doesn't fix the problem of overly burdensome licensing laws, but it should blunt one negative impact of those policies. A worker trained as an HVAC technician in New Jersey doesn't forget those skills when he or she crosses the Delaware River—and Pennsylvania has now joined the few states that have stopped pretending otherwise.