When and Why Should We License Jobs, and When Shouldn’t We?

The discussion of state regulation of occupations, or occupational licensing, should start with a couple of questions: 1) When and why should we regulate the labor markets through state licensing; 2) and when and why shouldn’t we regulate the labor markets through licensing?
 

Medical doctors (physicians) represent one of the earliest licensed occupations. Intuitively, most of us are comfortable with the idea that people ought not “practice medicine without a license,” because while licensing doesn’t guarantee that there will never be any problems, it does ascertain that at some point in time, the licensee completed minimum standards for entrance into the profession. In the case of medical professionals, most of us would agree that the health and safety of individuals may be better served by licensing those who have the most intimate contact with patients.
 

But where does it stop? In 1960, only about five percent of all occupations in Nebraska were regulated through licensing by government. Today, almost twenty percent of occupations require licensing of some sort by the state. This year, the Nebraska Legislature has bills which propose to add Surgical Technicians and Art Therapists to the licensed medical professions; Locator licenses (for those who come out and mark your yard when you “call before you dig”); and a number of other add-ons (or added licensing requirements) for licenses that have already been created.
 

Ultimately, both economists and policy analysts who have studied the impact of occupational licensing suggest that policymakers should ask some important questions before granting licensed status to occupations, because licenses tend to restrict the pool of those in the occupation, especially in middle- and low-income jobs, where the costs of becoming qualified for a license may be prohibitive to those who are considering the job. When the labor pool in the occupation is low, consumers can be left without the services of that occupation.
 

The Nebraska Department of Health and Human Services lays out an appropriate philosophy when considering regulation of health-related occupations by the state: “Regulate only when necessary to protect the public or advance the public interest via improved access to care; increase regulation only when it is necessary to protect the public, and; proposals must be both necessary and sufficient to address credentialing or credentialing-related issues or problems.”
 

That understanding of job regulation through licensing—“only when necessary to protect the public”—is one that was expanded beyond the health occupations arena with the passage of the Occupational Board Reform Act (LB299) in the 105th Legislature. That expansion of review was especially important in light of the realization that the state was requiring licenses for things like horse massage and hair braiding. If the state licenses, it should be with the well-being of the general consumer and the public in mind. In my next article, I’ll talk about one of the dangers of licensing that policymakers need to avoid.

 

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Licensing with Laura: Seeking Legitimacy Through Licensing

February 26, 2019 | by Laura Ebke

Several occupations are currently exploring possibilities here in Nebraska to require licensing for their professions. Two examples are Art Therapists and Music Therapists.
 

These professions undoubtedly contribute value to our health care system. Art Therapists and Music Therapists can use their training in mental health, social work, and in some cases physical rehabilitation by incorporating the use of the arts. They typically have masters-level college degrees in Art or Music Therapy and can take national exams for professional certification.
 

About one-third of the states have some regulatory framework for Art Therapists and/or Music Therapists. Some license them as a special category of mental health professional or social worker, under existing licensing boards, while a few created new state licenses and boards.
 

Other states recognize these professions generally, but don’t regulate them, allowing independent practice, or practice with other licensed professionals or health care institutions. This leaves it up to the individual patient or client, licensed professional, or institution to determine whether the therapist’s credentials are adequate for their needs.
 

I attended a hearing in which local Art Therapists were testifying for more regulation of their profession. I wondered why, since many of us would prefer to be left alone and to avoid red tape in our work.
 

One possibility was for reimbursement purposes. Perhaps insurance, Medicare, and Medicaid don’t recognize Art Therapy as a unique billing code, and it was thought licensing would address this issue. However, one of the senators on the committee noted that “just because you have a code, doesn’t mean insurance will pay.”
 

I listened carefully for examples of patients or the public being harmed by unregulated Art Therapists in Nebraska. But I heard none. No one from the public was asking for licensing to keep the them safe.

What’s going on here?
 

No matter how counterintuitive it may seem to many of us, more and more, it appears that seeking licensing—ASKING to be regulated (and in most cases, asking for a monopoly on the use of a title)—is a way for new professions to obtain a sense of legitimacy in the public eye.  In other words, practitioners who are licensed by the state are “the real deal.”
 

From a regulatory and economic point of view, granting “Legitimacy Through Licensing” is dangerous.

Who would have ever thought 70 years ago that there would be advanced degrees and professional certification in Art or Music Therapy? But as new fields are developed, the move to licensure increases bureaucracy; and increases costs of entry into occupations. That, in turn, limits who can enter, and raises prices for consumers, as fewer people can meet the demand.
 

Art Therapists are currently undergoing a “407 Review” within the Department of Health and Human Services. This is an independent review which will provide advice to the Legislature concerning the need for any new licensing or changes in the level of regulation or scope of practice. Ultimately, both the 407 review, and the licensing review covered by the Occupational Board Reform Act of 2018, establish the policy of regulating “only when necessary to protect the public” and using the “least restrictive means of regulation” possible.
 

The Legislature should look carefully at all new license proposals, and ask the questions: Why is this necessary to protect the public?  Are there alternate ways to approach needs like recognition for insurance payment purposes that doesn’t require full licensing? If active practitioners of the occupation are asking for the license, why? Do they have evidence of harm having been done to someone who was unqualified, or are they trying to protect their credential?
 

In my next article, I want to talk about another danger attached to licensing—the possibility that innovation and initiative will be stifled.

Read the entire "Licensing with Laura" series at PlatteInstitute.org/Jobs

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