Occupational licensing imposes mandatory professional requirements on individuals seeking entry into an occupation. The purpose of these professional requirements is to protect consumers in situations where they may lack the information necessary to evaluate the quality and safety of a good service. Initially, reasonable professional requirements extended only to occupations that could credibly demonstrate a need for licensure; but over time, licensure requirements have increasingly extended to cover more and more occupations.
These licensure requirements now include educational and experience requirements as well as a wide assortment of fees. Rather than to protect consumers, industry practitioners often lobby for licensure to legally restrict entry into their professions, reducing competition and raising industry wages through higher consumer prices. Thus, occupational licensure often hampers economic mobility and occupational choice by reducing employment opportunities, raising prices on consumers, and restricting consumer choice. The costs of occupational licensing often fall heaviest on the most disadvantaged and vulnerable groups in society, including the poor, minorities, military service members, and rehabilitated criminals. Alabama licenses a total of 151 occupations, covering over 432,000 Alabama workers, which represents over 21 percent of the state’s labor force. We estimate the total initial costs of occupational licensure, excluding the educational costs, to be $122 million. Annual license renewal costs both workers and consumers (who often pay for these costs in increased prices) $45 million total. This pales in comparison to the total initial education costs, which we estimate to be $65 billion, and the estimated $243 million annual continuing education costs for licensed workers in Alabama.
Given the substantial economic costs imposed by occupational licensing in Alabama, the state legislature must eliminate these borders to entry and ensure new barriers do not arrive.
In 2019, the legislature considered a bill that would have required any new licensing regulations to go before a sunrise committee. This bill was not considered in committee. It should be considered the first step in fixing Alabama’s overburdensome system. The state should then pass legislation that creates a more substantial review process of current occupational licensing statutes than the sunset process currently in place which has rarely, if ever, resulted in less regulation.