I do research on occupational licensing, and when I ask people to guess the state with the heaviest licensing burden, they often name New York first. They’re usually shocked when I tell them that New York is actually a model state in this regard, compared with most others. Their surprise is understandable, given New York’s well-earned reputation for onerous and often counterproductive regulation in many other areas. And yet, in this key sector, the state is performing well—and that’s welcome news, because requiring licensing for an occupation reduces the supply of practitioners in it by as much as 27 percent.
In a recent study conducted for the Archbridge Institute, the State Occupational Licensing Index (SOLI) 2024, Edward Timmons, Sebastian Anastasi, and I found that New York has the nation’s fifth-lightest occupational licensing burden. Our index considers 284 commonly licensed occupational titles and ranks states by whether one needs any form of license to do that job (barriers) and by whether that state has a specific license for that occupation (licenses). This methodology provides a simple way of keeping track of a state’s propensity to create obstacles to job entry through this kind of regulation. The “barriers” measure is meant to note cases in which one license may bar entry into many occupational titles; for example, one state may have an “electrician” license, while another may have ones for “high voltage electrician,” “low voltage electrician,” and “residential electrician.” The SOLI accounts for the differences in these two states by classifying the first as a state with three barriers and one license, and the second as a state with three barriers and three licenses.
New York does well overall, with a total of 148 barriers and 131 licenses. For comparison, Texas (another surprise, given that state's generally business-friendly environment) has both the most barriers and the most licenses overall: 199 and 163, respectively. The national averages are 174 and 133. The only states performing better than New York, according to the index, are Indiana, Wyoming, Missouri, and Kansas. These findings are corroborated by License to Work, an index on licensing barriers to low-income occupations, in which New York ranks 16th-best overall. Since 2017, New York has not added any new licenses in the 102 occupations License to Work monitors. Given both measures, it’s clear that New York is performing relatively well overall in keeping occupational licensing barriers low, though there is room for improvement in lower-income occupations.
Why does New York contradict its generally stifling regulatory reputation in this area? A 2015 white paper from the Obama White House offers some insight. In a section on “Licensing Best Practices,” the white paper lists five considerations for ensuring that licensing is not overly burdensome. Two at which New York excels are minimizing procedural burdens and licensing requirements for formerly incarcerated people, immigrants, and veterans. The New York Department of Labor is transparent on licensing requirements, providing an interactive dashboard on its website. Of the 165 distinct occupations that New York licenses in some fashion, 148 don’t impose criminal-record limitations.
New York also limits the scope of licenses. It has the same number of licenses in the State Occupational Licensing Index as Nevada, Michigan, and Connecticut, but the licenses that New York requires restrict fewer occupation titles—31 fewer than Nevada, 28 fewer than Michigan, and 23 fewer than Connecticut. New York reduces unnecessary barriers by being specific in the scope of licensing. This helps because, as a recent study from the Mercatus Center shows, increases in regulatory restrictions correlate with a decline in employment that is not offset by equal increases in wages.
The State Occupational Licensing Index highlights two fronts on which New York can improve. First, New York offers no form of universal licensing recognition, a reform that helps skilled workers bring their credentials with them from other states. Virginia enacted this reform last year, and 26 states have some form of universal recognition. Some evidence suggests that universal licensing increases in-migration for licenses with broadly varying requirements and boosts employment in states that implement the policy. Second, New York still requires licenses for too many occupations for which such credentials aren’t needed. It is one of only two states, for example, to license drama/movement therapists; in New York, they’re called “licensed creative arts therapists.” An occupational-licensing snapshot of New York from last year notes that the state requires licenses for 21 occupations that only 20 other states bother to recognize. Eliminating requirements for these occupations would be a sensible reform and improve New York’s standing further.
Occupational licensing excesses affect workers in many states. Though it has room for improvement, New York is not among the main offenders in this area.
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