The Licensing Passport

The problem

In 1950 about one American worker in twenty needed a licence from the state to do their job. Today it is more than one in five. Doctors and lawyers were always licensed; the growth has come in barbers, cosmetologists, auctioneers, interior designers, landscape contractors, sign-language interpreters, and hundreds of other occupations, each licensed by a state board, each on terms that differ from the state next door, and almost none of them portable. A licence is a permission to work in one state. Cross the line and it is a piece of paper.

The cost is measured in people who do not move. Economists who have studied the question find that workers in occupations with state-specific licensing exams move between states at a rate about a third lower than comparable unlicensed workers, because moving means losing the licence. A military spouse who is a licensed nurse moves every three years and has to requalify each time; Congress has passed three laws to help and the problem persists. A worker who could earn more, or a family that could pay less for housing, in another state, stays where the licence is.

The boards that grant the licences are, in most states, composed of the licensed, and they write the rules. A cosmetology licence in some states requires more hours of training than a paramedic's. The public-safety rationale is real for some occupations and decorative for most, and the fact that Texas and Ohio disagree about the correct number of hours to become a barber is not evidence that either has found it.

Arizona broke the pattern in 2019 with universal recognition: a licence in good standing from any state, held for a year, is a licence in Arizona, with a fee and a background check and no new exam. By 2025, 28 states had adopted some version, and 11 recognise other states' licences without restriction. The reform has not produced a wave of incompetent barbers. It has produced people who moved.

The proposal

The Licensing Passport: a licence in good standing in any state, held for one year, is valid in every state for the same occupation, by federal statute. The receiving state may charge its ordinary fee, run its ordinary background check, and require a short module on its own law where the occupation involves state law. It may not require a new exam, new training hours, or a new apprenticeship. Discipline follows the worker: a licence revoked anywhere is revoked everywhere.

How it would work

1. One year, then everywhere. A worker licensed for a year in one state, with no discipline on record, may practise in any other state on filing a notice and paying the fee. The receiving state issues its licence within 30 days or the notice serves as one.

1. What the receiving state may require. Its fee, at the same level as for its own applicants. A background check. Where the occupation applies state law, as real estate, insurance and law do, a module on that law and a test of it, not of the trade. Nothing else: no repeat of the trade exam, no additional hours, no residency period.

1. Discipline, reciprocal. The passport works only if the record travels. A national register, built on the existing databases for physicians and nurses, records every licence and every disciplinary action, and a worker whose licence is suspended or revoked in one state is suspended or revoked in all. A state that does not report to the register does not benefit from it.

1. The compacts, absorbed. Nurses, physicians, physical therapists and several other professions already have interstate compacts that do much of this for the states that join. The passport does not replace them; it makes their principle universal and covers the hundreds of occupations no compact will ever be written for.

1. Federal authority. Congress may regulate the interstate market for labour under the Commerce Clause, as it regulates the interstate market for everything else, and the passport is a rule about the movement of workers across state lines. Alternatively, it may be a condition of the federal workforce grants every state accepts. The proposal uses both.

1. The floor that stays. The passport does not tell a state whom it may license. A state may keep its licensing requirements for its own new entrants, and may argue that its requirements are the right ones. What it may not do is refuse a worker who met another state's requirements and has practised safely for a year, because that refusal is not about safety.

The numbers

The workers. More than 20 percent of the workforce, roughly 30 million people, hold a licence; about 5 million of them move between states in a decade and face the barrier.

The mobility cost. A third lower interstate migration in licensed occupations with state-specific exams, by the best estimate, which across those occupations means on the order of hundreds of thousands of moves not made each decade, and the earnings and housing savings that would have come with them.

The fees. A worker who requalifies in a new state typically pays several hundred dollars in fees and loses weeks to months of income while waiting. Across the moves that do happen, that is hundreds of millions of dollars a year in fees and lost wages for permission the worker already had.

Arizona. In its first five years the state issued tens of thousands of licences under universal recognition, with no measurable change in complaints or discipline in the occupations affected.

The honest objections

"A licence from a state with weak standards is not the same as one from a state with strong ones." True, and the passport's answer is the year of practice and the reciprocal discipline: a worker who has practised safely for a year is evidence of competence the exam was meant to predict, and a worker who has not is on the register. A state that believes its neighbour's barbers are dangerous may inspect them, as it inspects its own. It may not refuse them on the strength of a different number of training hours.

"This is a federal takeover of state licensing." It is a federal rule about movement across state lines, which is the one subject the Constitution reserved to Congress. States keep the power to license, to set requirements for their own entrants, to inspect, and to discipline. What they lose is the power to make a licence a wall against workers from other states, which is a power they have used for the benefit of incumbents rather than the public.

"Some occupations genuinely differ by state, and a worker trained elsewhere will not know the local rules." Where the difference is in state law, item 2 permits a module and a test on that law. Where the difference is in the trade, a plumber's knowledge of pipes does not change at the Ohio line, and an electrician trained on the national code is trained on the code every state uses.

"Licensing boards will lose fee income and lobby to gut the rule." They will, and they have in the 22 states that have not adopted recognition. A board that depends on charging workers twice for the same licence is a board whose funding model is the problem the passport addresses.

"The reciprocal discipline register will end careers over minor infractions in one state." The register records what the states record; it does not create discipline, and a state that suspends a licence for a minor infraction is making that choice today. What the register ends is the practitioner who is revoked in one state and licensed in the next, which is a real and recurring pattern that the current system cannot see.

Sources

• Morris M. Kleiner and Evan J. Soltas, "A Welfare Analysis of Occupational Licensing in U.S. States," Review of Economic Studies (2023); Kleiner and Krueger, "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market," Journal of Labor Economics (2013)
• Janna E. Johnson and Morris M. Kleiner, "Is Occupational Licensing a Barrier to Interstate Migration?" American Economic Journal: Economic Policy (2020)
• Archbridge Institute, State Occupational Licensing Index 2025; Institute for Justice, Universal Recognition of Occupational Licenses Act model legislation and state adoption tracker
• Arizona Revised Statutes § 32-4302 (2019), universal licensing recognition
• Bureau of Labor Statistics, Current Population Survey, share of employed workers with a certification or licence
• Proposals № 013 (The Portfolio Act); № 014 (The Fractional Republic); № 028 (The Apprentice Republic)