Occupational Licensing Reform Can Help California Tackle Its Jobs Crisis

California’s current jobs crisis is two-fold.

On one hand, the state is facing a shortage of workers in many licensed occupations that have played—and continue to play—an essential role during the pandemic. Many of these professions—including registered nursesteachers, and mental health professionals—were facing workforce shortages even before COVID. Now, pandemic-related impacts such as worker burnout and early retirement have exacerbated these shortages.

On the other hand, the state’s unemployment rate is the highest in the nation. Many out-of-work Californians are looking for opportunities to transition to better, higher-paying jobs.

What is the thread that ties these two problems together? One part of the answer is California’s complex and overly burdensome occupational licensing system.

In 2016, the Little Hoover Commission studied the state’s occupational licensing system and found that one in five Californians must receive permission from the government to work.

Licensing occupations certainly has its benefits. Most importantly, it helps protect the health and safety of California consumers. It also professionalizes occupations and standardizes services.

But these benefits must also be weighed against the consequences of licensing. It slows growth in those occupations, inhibits interstate movement, and acts as a barrier to many looking for upward job mobility.

California, the Commission found, does not always strike a balance between the two—as evidenced by the discrepancies found in licensing requirements across occupations.

For example, manicurists had to complete at least 400 hours of education, which can cost thousands of dollars. They also had to take a written and practical exam to become licensed. Conversely, tattoo artists just needed to register with their county’s public health department and take an annual bloodborne pathogens class, which could be completed online for $25.

In Jobs for Californians: Strategies to Ease Occupational Licensing Barriers, the Commission called for a comprehensive review of the state’s occupational licensing system. As envisioned by the Commission, the review would seek to determine whether the state’s licensing requirements are too broad or burdensome to labor market entry or labor mobility.

The Commission also called on the state to address several systemic issues in how it licenses occupations, specifically asking the state to:

  • Authorize the collection of demographic data so policymakers can know if certain demographic groups are disproportionately affected by licensing regulations.
  • Require reciprocity for all professionals licensed in other states as the default. Make licensing boards prove why they should not honor a license issued in other states.
  • Provide additional resources to the committees conducting the sunrise review process—used when determining if consumers are best protected by licensing an occupation—and the sunset review process—used when determining if licensing is still the best method of consumer protection—to assist with data verification.

In its study, the Commission also learned that former offenders, military spouses, veterans, and foreign-trained workers are disproportionately harmed by licensing regulations.

Consequently, California is missing out on much-needed workers who may otherwise be well-equipped to do jobs that are experiencing workforce shortages. This is especially relevant for foreign-trained workers, who bring cultural competency and language skills that are sorely needed, particularly in healthcare.

The Commission offered several recommendations to help these groups—and all Californians—more easily enter licensed occupations without lowering standards:

  • Develop bridge education programs so that veterans and workers trained outside of California can quickly meet missing educational requirements.
  • The state has already passed several laws to move veterans and military spouses to the front of the licensing line. But applicants still report delays. The state should fund a study to find the gaps between legislation and implementation and recommendations on how to bridge them.
  • Create interim work and apprenticeship models to allow Californians to earn money while meeting licensing requirements and to create upward mobility pathways. The number of apprentices in California has grown in the last five years, although they remain overwhelmingly concentrated in the construction and building trades.
  • Take common sense steps to aid former offenders in becoming licensed:
    • Post licensing criteria online to help potential applicants be better informed about their possibilities of gaining licensure.
    • Require background checks instead of relying on applicants’ memories on applications.
    • Create an intermediate informal appeals process between a license denial and administrative law hearing to allow applicants the opportunity to explain problems with their applications.

Some of the Commission’s recommendations regarding former offenders have been partially addressed via legislation, though gaps remain. In 2018, lawmakers passed AB 2138 (Chiu), which—among other things—requires boards to post licensing criteria on their website. For licensing boards that require fingerprint background checks, the bill also eliminated obligatory self-disclosure of prior convictions. The Commission applauds this partial implementation of its recommendations, but more work needs to be done: the bill only applies to occupations licensed under the Department of Consumer Affairs.

California needs to better understand how its current occupational licensing system works or doesn’t work. The state must also break down the barriers preventing Californians from accessing good jobs. The Commission’s recommendations will help policymakers do just this.