I do research on occupational licensing, and when I ask people to guess which state bears the greatest 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 to most other states. Their surprise is understandable, given New York’s well-earned reputation for burdensome and often destructive regulation in many other areas. However, the country’s performance in this key sector is good – which is good news, because requiring a license for a profession reduces the supply of practitioners by up to 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 fifth-lightest occupational licensing burden in the country. Our index takes into account 284 commonly licensed job titles and ranks states by whether a person needs any form of licensure to do that job (barriers) and whether that state has a specific license for that occupation (licenses). This methodology provides a simple way to track a state’s tendency to create barriers to job entry through this type of regulation. The “barriers” measure aims to note instances where a single license may prevent entry into multiple professional titles; For example, one state may have an “electrician” license, while another state may have “high voltage electrician,” “low voltage electrician,” and “residential electrician” licenses. The SOLI index takes into account 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 fares well overall, with a total of 148 barriers and 131 licenses. By comparison, Texas (another surprise, given that state’s generally business-friendly environment) has the highest number of impediments and the highest number of licenses overall: 199 and 163, respectively. The national average is 174 and 133. The only states that do better than New York, according to the index, are Indiana, Wyoming, Missouri and Kansas. These findings were supported by Employment Licensing, an index of licensing barriers for low-income occupations, where New York ranks 16th overall. Since 2017, New York has not added any new licenses in the 102 occupations licensing labor inspectors. Looking at both measures, it is clear that New York does relatively well overall in keeping occupational licensing barriers low, although there is room for improvement in lower-income occupations.
Why does New York contradict its generally stifling regulatory reputation in this area? The Obama White House’s 2015 white paper offers some ideas. In the section on “Licensing Best Practices,” the white paper lists five considerations to ensure licensing is not too burdensome. Two where New York excels are reducing procedural burdens and licensing requirements for formerly incarcerated people, immigrants, and veterans. The New York Department of Labor is transparent about its licensing requirements, providing an interactive dashboard on its website. Of the 165 distinct professions that New York licenses in some way, 148 do not impose criminal record restrictions.
New York also limits the scope of licenses. It has the same number of licenses in the state’s occupational licensing index as Nevada, Michigan, and Connecticut, but the licenses New York requires restrict fewer occupational 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 by the Mercatus Center showed, increases in regulation are associated with declines in employment that are not offset by equal increases in wages.
The state’s occupational licensing index highlights two fronts on which New York can improve. First, New York offers no form of universal recognition of licensure, a reform that helps skilled workers bring their credentials with them from other states. Virginia enacted this reform last year, and 26 states have received some form of universal recognition. Some evidence suggests that universal licensing increases migration for licenses with widely varying requirements and boosts employment in states that implement the policy. Second, New York still requires licenses for a very large number of occupations that do not require such qualifications. It is one of only two states, for example, that license drama/movement therapists; In New York, they are called “licensed creative arts therapists.” A quick glance at New York’s occupational licensing from last year indicates that the state requires licenses for 21 professions that only 20 other states are interested in recognizing. Eliminating the requirements for these occupations would be a reasonable reform and improvement to New York’s standing.
Occupational licensing abuses affect workers in many states. Although New York has room for improvement, it is not among the major offenders in this area.
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