Last week, economist Tim Kane put on YouTube a civil and brief 3-way discussion among himself, Robert Litan, and Allison Schrager about what 3 economic policies each would advocate to “save” U.S. democracy. One of Schrager’s policy proposals (at the 9:04 point) was to federalize occupational licensing rules. She argued, correctly, that state rules reduce mobility across states because someone who is licensed in state X might not be able to practice in state Y due to different rules in state Y.
Schrager’s case is that if we had federal licensing, people with particular licenses could move freely between states and not have to retrain, attend classes, etc. before practicing in the new state. That’s the upside. But in the discussion following, Tim Kane notes the downside: that someone in the Labor Department 20 years down the road (I would say fewer than 5 years down the road) will require a 5,000-word essay for plumbers or whatever. How, Tim asks (at the 10:40 point), do we stop that. Schrager doesn’t answer. Instead she says that we have that at the state level. She’s right. But if we get it at the federal level, the federalism exit option is blocked.
There is some good news here. Federalism is working to some extent. The Arizona government, under previous Governor Ducey, changed the law to allow people who are licensed in one state to automatically get a license for the same occupation in Arizona. Also, New Hampshire governor Chris Sununu, in his Executive Budget Summary proposed the following:
[T]he budget eliminates 692 unnecessary statutory provisions, 14 unnecessary regulatory boards, and 34 license types. Licensing timeframes will be standardized for all professionals to eliminate administrative burden and ensure that everyone in New Hampshire who applies for a license receives it in a timely manner. At the same time, universal recognition of licensed professionals in other states is established making it simple to relocate and join our state’s workforce.
Florida governor Ron DeSantis has moved Florida somewhat in that direction. And, although this isn’t quite the same, Pennsylvania governor Josh Shapiro, in his first day in office, signed an executive order eliminating the college degree requirement for 65,000 state government jobs.
If we had state governments representing even 40% of the U.S. population implement such reforms, that would be so much better than shifting things to the federal level.
