1 in 5 Americans Still Need Government Permission To Work
Occupational licensing raises costs and limits mobility without improving safety.
Last week, an article in Governing noted that despite years of reform efforts, roughly one in five jobs in the United States requires government permission in the form of occupational licensing. In a world that is more potentially mobile and flexible than ever, licensing requirements can keep people fixed in place or pose high barriers to entering new trades and professions. The Archbridge Institute's 2026 State Occupational Licensing Index reveals which states are most burdensome, and which make it relatively easy to earn a living.
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22 Percent of Americans Need Licenses To Work
"Too often, the occupational licensure laws on the books do not reflect the world we actually live in," Alanna Wilson cautioned in Governing. "American workers wishing to launch a career, build their own business or re-enter the workforce in one of 102 lower-income occupations must on average give up nearly a year to education and on-the-job training, pass at least one exam and pay nearly $300 in fees."
Wilson drew from a December 2025 Federal Reserve Bank of Minneapolis report which found that "in recent years, 22 percent of the employed have reported holding a government-issued license, in professions ranging from physical therapy to cosmetology to public school teaching." After decades of creeping credential requirements, the report found, the "share of workers who have a license and the number of licensed occupations appear to have stabilized." While licensing requirements are holding steady, they're not disappearing: "Delicensure is rare."
The Minneapolis Fed maintains an occupational licensing dashboard which puts requirements into context by showing which jobs require licenses. While licensing advocates claim that getting government permission is necessary to protect health and safety, that argument becomes less credible when many occupations are licensed in some states and not others. Are Arizona and Nevada suffering because they don't require electricians to navigate California-style credentialing? Is Rhode Island sparing state residents from risks posed by license-free nutritionists in New Hampshire?
Not all licensing requirements are equally burdensome. As detailed in this year's Archbridge report, some states require nominal training and fees while other states put applicants through the ringer. Certification and registration requirements can be intrusive without being as burdensome as licensing. Rules sometimes tie jobs together in ways every bit as restrictive as explicit licensing requirements.
"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," Archbridge notes. "In several states, shampooers must obtain cosmetology licenses to work."
On the other hand, there's a growing trend for states to recognize licenses issued elsewhere. That doesn't eliminate work barriers but makes them less damaging to job mobility. Archbridge's report—prepared this year by Noah Trudeau, assistant professor of economics at Troy University and Labor Policy Fellow at Archbridge; Edward Timmons, Vice President of Policy at Archbridge; and Benjamin Seevers of West Virginia University—breaks down the details of state barriers to work.
No Rhyme or Reason to Licensing Requirements
According to Archbridge's report, the five most burdensome states in the union are Oregon, Texas, Tennessee, Arkansas, and New Jersey. The five states that put the fewest bureaucratic hurdles in the way of work are Missouri, Kansas, New York, Indiana, and Colorado.
As the report points out, medical doctors are licensed in every state. Nail technicians, for unclear reasons, also need licenses in every state. Most regulated jobs, like the electricians and nutritionists mentioned above, are licensed in some states but not others. Master gas fitters face barriers of some kind in 44 states, including licensing requirements in 11. Dental radiographers face similar burdens in 33 states. Security guards are licensed in half of states, as are fuel piping contractors. Medical assistants and animal breeders are licensed in 10 states. Mold remediation workers need licenses only in Texas.
In other words, while some heavily regulated jobs arguably pose safety concerns, others that might raise similar issues are intermittently licensed. That offers an opportunity to assess whether licensing offers benefits.
'Occupational Licensing Does Not Improve Public Health'
"A broad ideological spectrum of analysts and economists mostly agrees—occupational licensing does not improve public health in any scientifically rigorous or statistically significant manner," Spence Purnell, then of the Reason Foundation, which publishes Reason, wrote in 2018. He added that a study of dental hygienists found "the stricter the licensing requirements, the poorer the health outcomes. The study found this is because the more stringent regulations led to higher prices, which led to low income-earners foregoing routine dental work, which eventually led to more oral diseases, more pain and more costs to the patients."
Rather than safety worries, the 2025 Minneapolis Fed report observed that state licensing requirements seem driven by the policies of neighboring states, lobbying by professional associations for barriers to entry, and competition for jobs from immigrants. "Licensing disproportionately reduces employment of foreign-born workers," researchers found.
Instead of benefits, licensing requirements raise costs to consumers by limiting competition: "Shifting an occupation from unlicensed to licensed reduces employment in the licensed occupation by 29 percent," according to Chris Edwards of the Cato Institute. "Such barriers also discourage hiring across state lines, and thus limit workers' interstate mobility."
While, as the Minneapolis Fed cautioned, eliminating licensing requirements is very rare, states have moved to recognize other states' licenses. "As of 2026, 28 states have adopted some form of universal licensing recognition—the same as last year," according to Archbridge. "Universal" recognition isn't always universal—some states specify that the licenses they recognize be subject to "substantially similar" rules as those issued locally, while others recognize only the licenses of state residents. But 11 states earn Archbridge's gold medal for universally recognizing occupational licenses without restrictions.
Universal license recognition isn't an entirely satisfactory substitute for eliminating requirements that people get government permission to work.
But eliminating licensing would be a difficult ask of lawmakers who sold the public on the idea that pointless and expensive burdens improve public safety. In that sense, universal recognition is a positive reform to regulations that hurdles in the way of jobs of prosperity.
